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Pros and cons swirl around Keystone Arguments over TransCanada’s proposed line between meeting needs of producers to move oil, and possible new Canadian jobs Gary Park For Petroleum News
TransCanada’s planned Keystone heavy oil pipeline is urgently needed, or it’s a blight on the Canadian economy. Take your choice.
Consulting firm Purvin & Gertz says the possible 1,800-mile 435,000 barrel-per-day system is one of many transportation projects that are essential to head off a shortfall in Canadian pipeline capacity of 416,000 bpd by 2011.
But a major Canadian labor union, quoting Ottawa-based consulting firm Informetrica, estimates the pipeline will rob Canada of 18,000 prospective new jobs in the energy sector.
The Purvin & Gertz findings were submitted to Canada’s National Energy Board in support of TransCanada’s application, which includes a request to convert 740 miles of natural gas pipeline to an oil link in the Keystone system.
Study author Thomas Wise said pipeline space out of Western Canada will be “very tight” in 2007 and 2008 and, without relief, the shortfall will hit 416,000 bpd in 2011 and 937,000 bpd in 2016.
It bases that conclusion on a forecast net growth in Western Canadian oil production of 749,000 bpd to 2.3 million bpd this year, including 494,000 bpd of additional heavy blends to 1.55 million bpd, with more to come.
Keystone scheduled for 2008, 2009 The US$2.1 billion Keystone connection from Alberta to the Wood River/Patoka refinery areas in Illinois is scheduled to come on stream in 2008 and 2009 as TransCanada adds a major element of crude transportation to its long history as a gas pipeline.
So far, it has long-term contracts covering 340,000 bpd and has backing from ConocoPhillips (which is poised to take an equity stake), Suncor Energy and Canadian Natural Resources.
ConocoPhillips, in its National Energy Board filing, agreed the forecast pipeline crunch is a “reasonable” prospect, while Suncor expects a squeeze on pipeline capacity even if Keystone, Enbridge’s Southern Access, a TransMountain expansion, a looping project by Minnesota Pipeline and additions to both legs of the Express system go ahead.
Union wants refining in Canada But all of that tub-thumping for Keystone failed to resonate with the Communications, Energy and Paperworkers Union of Canada, using the Informetrica findings as its ammunition.
That study estimated that refining Keystone’s 400,000 bpd in Canada would create about 18,000 energy-related jobs.
Union President Brian Payne said in a release that former Alberta Premier Peter Lougheed and others have argued it is “in the interests of Canada as a whole to create a diverse resource economy rather than simply a large extraction industry.”
He said the National Energy Board should include that issue in making its decision on Keystone.
A spokeswoman for TransCanada said her company is just meeting the needs of producers, adding the “upgrading decisions are determined by the marketplace.”
The regulatory hearings on Keystone are due to start Oct. 23, when some observers believe TransCanada will face its toughest battle in converting a gas pipeline to oil.
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