TransCanada’s President of Energy and Oil Pipelines, Alex Pourbaix, began his talk at the 2012 North Dakota Governor’s Pipeline Summit in June by telling the audience that when he got into the pipeline business some 20 years ago it was fair to say it was “one of the most boring businesses on earth,” and that he never expected to become the “media darling” he apparently has become.
Referring to media coverage of the proposed Keystone XL pipeline, Pourbaix said his company monitors news stories and has noticed weeks in which more than 4,000 news articles appeared about the Keystone XL project. What that indicates to Pourbaix is that, as an industry, pipeline companies need to continue to improve communication with the public about the safety and reliability of pipeline systems.
Taking a moment to put North America oil and natural gas demand and production into perspective, Pourbaix said that regardless of what people may hear, North America is in no immediate fear of losing any demand for refined products.
In fact, he continued, the U.S. is the world’s largest consumer of refined products at about 20 million barrels per day, and historically more than two-thirds of that product has been coming from outside of the U.S.
With what is happening in Alberta and in the Bakken, Pourbaix believes North America will actually see an opportunity to become energy independent “in our lifetime.”
Gulf Coast project
Pourbaix pointed out that with the growth in production in Alberta and in the Bakken petroleum system in Canada and the U.S., TransCanada saw an opportunity several years ago to connect the growing source of supply to the very significant refinery complexes in the U.S. located in the southern PADD II and the Gulf Coast PADD III.
He said that while the Gulf Coast PADD III refining center is the largest refining complex in the world, over the past several decades two-thirds to three-quarters of the oil going into that U.S. refining complex has been imported.
When President Barack Obama denied the original Keystone permit, Pourbaix said TransCanada made the decision to decouple and move forward with the Gulf Coast portion of the Keystone project and proceed with the line running from Cushing, Okla. to the Gulf Coast because of significant shipper support.
The total cost of the project is close to $2.5 billion, he said, and will have a capacity of about 800,000 barrels a day. This will go a very long way in reducing a significant discount that WTI crude is seeing relative to other crude sources, which he said, is “a really positive thing.”
Keystone XL
More relevant to the North Dakota Summit, Pourbaix told the audience, is the Keystone XL project. A $5.3 billion project, the Keystone is planned to run from Hardisty, Alberta through Baker, Mont. to Steel City, Neb. He said the Keystone XL will provide about 800,000 barrels per day of capacity, taking oil from the oil sands in Alberta, and picking up about 100,000 barrels per day in the Bakken and delivering this oil to Mid-Continent markets as well as to the Gulf Coast.
Part of the Keystone XL project is the Bakken Marketlink project, which is essentially the “onramp” for Bakken crude onto the Keystone system at Baker, Mont.
TransCanada had an open season on this portion of the project and signed up 65,000 barrels per day of long-term contracts. With a Bakken capacity of 100,000 barrels per day, Pourbaix said the project represents a significant opportunity for “taking away this great Bakken light, sweet oil.”
Other opportunities for Bakken oil
TransCanada has seen a great deal of interest from Bakken producers for other opportunities to get oil out of the region besides the Bakken onramp to the Keystone XL. One such opportunity, Pourbaix said, is after the Keystone XL is built, TransCanada will actually offload some of the base volume from the base Keystone system that runs across southern Saskatchewan and Manitoba then south through eastern North Dakota, South Dakota to Steel City. That, according to Pourbaix, will free up some capacity on the base Keystone system and enable TransCanada to take on more Bakken crude.
In addition, TransCanada has a couple of other projects that have not yet been formally announced, one of which has received a lot of press.
Pourbaix said TransCanada has a huge natural gas pipeline system that runs all the way across Canada to Quebec in the east. Right now, he said, with production declines on the gas side in the Western Canadian Sedimentary Basin, the company has some spare capacity on pipeline grid that runs across Canada, and believes there is an opportunity to convert one or more of those gas lines to crude.
Pourbaix said there is a great market for Bakken crude in eastern Canada where there is about 850,000 barrels per day of refining capacity. Today that is largely served by offshore imports.
TransCanada believes there is the opportunity to ship light, sweet Canadian crude, synthetic crude, and Bakken crude to that region. The company has received a lot of interest in this possible project from potential shippers and will keep working it, Pourbaix said.
Safety
Pointing to a bar graph showing transportation accident rates for railcars, ships and pipelines from 1999 to 2008, Pourbaix said he believes that “there is not enough understanding among the general public as to the benefits of pipelines over the other methods of transporting.”
The bar graph statistics, which were provided by the U.S. Bureau of Transportation Statistics, clearly indicate that among these three modes of transporting hydrocarbons, pipelines are by far the safest. Any opportunity where a pipeline can be substituted for tanker trucks or railcars is a very good thing for safety and the public, Pourbaix said.
“Not only are pipelines safe, they are becoming increasingly safer,” he said, pointing to an Association of Oil Pipelines Statistics chart showing a rolling average of the number of spills per 1,000 miles of pipe in the U.S.
Pourbaix said those statistics indicate that less than one spill would be projected for 1,000 miles of pipeline operating over three years, and the total spilled volume projected would be less than 400 barrels.
It is “an incredibly safe industry,” he continued, and said it is getting safer every day with new, modern construction techniques; leak detection techniques; and fusion-bonded, epoxy coated pipe.
Pourbaix closed by saying the pipeline industry needs to do a better job of getting this information out to the public because there is a lot of bad information out there.
