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Canada faces gas liquids challenge
Canada’s National Energy Board expects rising imports of condensate to support the oil sands sector will reach 346,000 barrels per day by 2020 compared with 78,000 bpd in 2008.
Diluents are needed for blending with bitumen to allow the sticky substance to flow through pipelines.
The NEB forecasts that total domestic production of natural gas liquids, which includes propane, butane and ethane, will drop to 531,000 bpd in 2020 from 714,000 bpd in 2008, reflecting the anticipated decline in conventional gas production in Western Canada.
“Although new unconventional sources of gas (including shale gas, tight gas and coalbed methane) are expected to increase total future gas supply, these new sources generally have lower gas liquids concentration and, as a result, contribute much less NGL production,” the NEB report said.
“The impact of these changes in Canadian NGL markets has profound implications in terms of future infrastructure needs,” ranging from new import pipelines and new installations for reception, storage and distribution to oil sands producers.
Straddle plants extract NGLs About 90 percent of Canada’s NGLs are produced from gas processing at straddle plants which extract ethane for use in Alberta’s petrochemical industry.
In 2007, straddle plants accounted for about 76 percent of the ethane produced in Alberta, 51 percent of the propane, 33 percent of butanes and 9 percent of pentanes-plus.
The NEB said that although the entire ethane production is consumed in Alberta, the province’s petrochemical plants do not have enough ethane to utilize their total capacity of about 270,000 bpd.
The decline in natural gas production has resulted in falling Canadian NGL exports since 2005, with propane at 110,000 bpd in 2008 and butane at 26,000 bpd. Net exports of propane are expected to reach 30,000 bpd in 2020.
To meet the demand for condensates, Enbridge has two projects in the works — its Southern Light pipeline is designed to import 180,000 bpd from the U.S. Midwest after it starts operation in 2010 and the proposed Northern Gateway line, planned for startup in 2015, will carry 193,000 bpd from Kitimat, British Columbia, to Edmonton.
—Gary Park
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