In The Media

Trans Mountain or No, Alberta has some Oil Shipping Options

by Robert Tuttle (feat. Kevin Birn)

Bloomberg Quint
April 10, 2018

(Bloomberg) -- If Kinder Morgan Canada Ltd. decides to shelve its now-stalled Trans Mountain pipeline expansion project, oil sands producers will have to get creative about moving their crude.

The line would open up 590,000 barrels a day of new capacity to Vancouver. Without it, producers are left with two main alternatives: TransCanada Corp.’s Keystone XL pipeline and Enbridge Inc.’s Line 3 expansion to Superior, Wisconsin. Neither is a silver bullet for Canada’s growing supply glut.

The two projects would allow Canada to export more than a million additional barrels a day combined, which is “plenty of new capacity for growth” through 2023, according Mike Walls, a Genscape Inc. analyst. But production growth could surpass pipeline capacity again by the mid 2020s, according to Canadian Association of Petroleum Producers’ projections. And, unlike Trans Mountain, neither line offers access to coveted Asian markets.

Here are a few other possibilities producers might want to consider:

Rail Revolution

Uncertainty surrounding the fate of Trans Mountain may encourage Canadian oil producers to sign long-term commitments to ship crude by rail, Kevin Birn, a director at IHS Energy in Calgary, said by phone. That could reduce inventories and improve the price.

The pipeline bottleneck that emerged late last year sent Canadian heavy oil prices to their lowest level in more than four years, relative to WTI futures. Prices improved somewhat as train shipments rose but rail companies including Canadian National Railway Co. and Canadian Pacific Railway Ltd. have expressed a reluctance to add crude-by-rail capacity until oil companies commit to shipping set volumes for the long term.

Get More Efficient

Enbridge, operator of the biggest oil export pipeline network in Canada, said last year that it could add 500,000 barrels a day over several years to its pipeline system with “low cost” expansions that require “minimal permitting.”

The company already seeks to add 175,000 barrels a day to its Mainline system by next year by using drag-reducing additives and replacing North Dakota barrels with Canadian crude. Further capacity expansions could be achieved through upgrading machinery and restoring full capacity to its Line 4.

Innovation

New technologies are emerging that could make transporting crude easier. Last month, Alberta’s government pledged C$1 billion to support the construction of partial upgraders that would lighten oil-sands bitumen just enough so it flows through pipelines without adding diluent. Diluent, typically light condensate or synthetic crude, currently must be added to bitumen and accounts for about a third of the volumes that are shipped.

Another new idea: Turn bitumen into solid pellets so it can be transported via ordinary rail cars and shipped on vessels. The rail company Canadian National announced in December that Calgary-based Toyo Engineering Canada Ltd. has been selected to design and build a pilot project to produce the so-called CanaPuxTM pellets. Such a solution may allow producers to get around a ban on tankers in the waters of northern British Columbia and ship crude out of the port of Kitimat, avoiding Vancouver.

Other Pipeline Options

Enbridge’s acquisition of Spectra Energy Corp. last year gave the company control of the Express Pipeline, a 280,000 barrel a day line running from Hardisty, Alberta, to Casper, Wyoming, where it connects with the Platte pipeline that runs to Wood River, Illinois. Expansion of the Express line is one of the “potential commercial synergies” the company is considering. Another possibility is reversing the Southern Lights pipeline that currently transports light diluent from Illinois to Alberta.


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PODCAST

Canada's State of Trade: Getting Our Goods To Market

May 17, 2018


On today's Global Exchange Podcast, we continue our series on the state of Canadian trade in a world of growing populism and protectionism. Today's episode, recorded during our February 13th State of Trade conference in Ottawa, features Bruce Borrows, Jennifer Fox, and David Miller in conversation with the Wilson Center's Laura Dawson about getting Canadian goods to international markets.


IN THE MEDIA

Between Trump, Iran and North Korea, Canada’s G7 has a high potential for chaos

by Chris Hall (feat. James Trottier & Colin Robertson), CBC News, May 18, 2018

The struggle Trudeau could face if Kinder Morgan walks away from Trans Mountain

by Robert Tuttle & Michael Bellusci (feat. Dennis McConaghy), Bloomberg News, May 18, 2018

Canada 'a laughing stock': Experts react to Trans Mountain indemnity

by April Fong (feat. Dennis McConaghy), BNN Bloomberg, May 18, 2018

AUDIO: NAFTA update

with Danielle Smith (feat. Sarah Goldfeder), Global News Radio, May 18, 2018

VIDEO: NAFTA Deadline Day (@ 3:00)

with Don Martin (feat. John Weekes), CTV Power Play, May 17, 2018

VIDEO: Deal or no deal on NAFTA: Canada and U.S. send mixed messages

with Rosemary Barton (feat. Colin Robertson), CBC The National, May 17, 2018

Trump’s 'submission' strategy is not working so expect NAFTA talks to drag on

by Kevin Carmichael (Feat. Eric Miller), Financial Post, May 17, 2018

Backstop deal may be last hope for TransMountain pipeline, says former oil executive

by CBC News (feat. Dennis McConaghy), CBC News, May 17, 2018

Stuck with limited oil export options, Liberals may regret B.C. tanker ban

by John Ivison (feat. Dennis McConaghy), National Post, May 17, 2018

Feds OK early start to construction of navy’s new supply ships

by Lee Berthiaume (feat. Dave Perry), The Canadian Press, May 17, 2018


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