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Sandahl: pipeline boom in the offing Possible link to U.S. East Coast one of lines that could bring 1.32 million bpd of oil sands production by 2015, Enbridge says Gary Park For Petroleum News
A spider’s web of new oil pipelines spreading out from Alberta, including a possible link to the U.S. East Coast, could handle an additional 1.32 million barrels per day of production from the oil sands by 2015, a senior official with Enbridge said.
Speaking to an Insight Information oil sands conference in Calgary, Rick Sandahl, Enbridge’s senior vice president of market development, said there will be a need for “significant infrastructure changes going forward,” estimating the cost at C$6.15 billion.
“Getting to existing markets isn’t adequate,” he said. “You need to have pipelines to get to new markets.”
Sandahl laid out the following possible projects:
• A C$1.4 billion system delivering 300,000 barrels per day from the Chicago area to refineries at Philadelphia, Baltimore and New Jersey by 2010-12. An eastern pipeline could also open access to Canadian refineries, notably in Montreal.
• Expansion of Enbridge’s Spearhead system with capacity to ship 65,000 b/d at a cost of US$55 million, starting in 2009. Spearhead came on stream last March and has eventual capacity of 125,000 bpd from Chicago to Cushing, Oklahoma,
• A US$200 million, 200,000 bpd extension from Chicago to the U.S. Gulf Coast, followed by a second Spearhead expansion in 2011 to add 100,000 bpd at a cost of US$215 million.
• An Eastern PADD II pipeline from Patoka, Ill., to the Gulf Coast, carrying 250,000 bpd in 2010 and costing US$280 million.
• The 400,000 bpd Gateway pipeline to the British Columbia coast for tanker shipment to Asia and California.
Possible pipeline to U.S. East Coast new The new item in the mix is the possible pipeline to the U.S. East Coast, where there is growing interest among refiners in oil sands production, although Sandahl emphasized that discussions are “very early, very preliminary.”
An Enbridge spokesman would not be drawn, for “competitive reasons,” into predicting an outcome from the current round of discussions.
The Gateway project has been slowed by negotiations to obtain commitments from anchor shippers, with the proposed in-service date extended from 2010-11 to 2012-14.
But Sandahl was emphatic that the project is “a matter of when not if.”
For Enbridge and rival Kinder Morgan Canada an added challenge has been crossing British Columbia because of extensive national and provincial parks and demands from aboriginal communities.
Also in the works is a proposed 250,000 bpd standalone pipeline from Alberta to Texas by privately held Altex Energy.
Alex President and Chief Executive Officer Jack Crawford told the Calgary conference the pipeline would reduce the risk of upgrading bitumen in Alberta and would compete on a cost-basis with other expansion alternatives.
He said the U.S. Gulf Coast market already has coking capacity and most refiners have significant expansion plans.
In addition, Crawford said, many contracts with producers in Venezuela and Mexico will expire soon, while Venezuelan President Hugo Chavez is threatening to reduce exports to the U.S.
Altex is now in the process of finalizing contract terms and reviewing its final design, confident “we’ve got the right product for the right market,” Crawford said.
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