NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES.
HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS

SEARCH our ARCHIVE of over 14,000 articles
Vol. 22, No. 9 Week of February 26, 2017
Providing coverage of Alaska and northern Canada's oil and gas industry

Pipeline guessing game

Enbridge CEO narrows Canadian field to only 2 major pipelines over next decade

GARY PARK

For Petroleum News

In the midst of a volatile, rapidly shifting landscape, one of the toughest acts in the Canadian petroleum industry is assessing what extra crude oil pipeline capacity will be required and when.

Al Monaco, chief executive officer of Enbridge, Canada’s No.1 pipeline company, entered the debate by suggesting Canada will need only two major new pipelines out of the oil sands over the next decade.

He said Enbridge’s own recently approved US$7.5 billion Line 3 replacement to add 375,000 barrels per day of new capacity from the oil sands to the U.S. by 2019, and additions to its Mainline system, will likely be enough to meet the company’s needs.

Beyond that Monaco said that “based on the current supply outlook,” one other major line by a competitor should suffice.

“We believe our post-Line 3 capacity, along with future expandability, and one of the other pipelines being proposed (Kinder Morgan’s Trans-Mountain expansion and TransCanada’s Keystone XL and Energy East proposals) provides enough capacity well into the latter half of the next decade,” he said.

But he noted that building pipelines is based on market demand by producers and refiners, not Enbridge.

Separately, he said Enbridge’s C$37 billion acquisition of Spectra Energy, which is due to close this quarter, will create the largest North American energy-infrastructure company.

Monaco said the deal looked favorable when it was first announced last year and looks even better as oil prices recover and the Canadian and U.S. governments give approval to a number of key projects, adding the political landscape in North America has shifted “to a more balanced tone for energy and infrastructure development.”

TransCanada’s Keystone XL

That outlook improved sharply when President Donald Trump cleared the way for Keystone XL and TransCanada wasted no time refiling its application with Nebraska authorities, saying it expects a decision this year on the crucial leg through the state for the US$8 billion project that will ship 830,000 bpd to Gulf Coast refineries that need Canadian heavy crude to offset declining supplies from Mexico and Venezuela.

TransCanada Chief Executive Officer Russ Girling said his company is in talks with crude shippers to update contracts for committed volumes.

“While some shippers may increase or decrease those commitments we do expect to retain commercial support to underpin the project,” he said.

At the same time TransCanada is drawing close to deciding whether to restart its application for the 1.1 million bpd Energy East system.

Suncor Energy lent weight to that thinking, saying it remains a committed shipper for both Keystone XL and Energy East.

Kinder Morgan in talks

Industry sources say Kinder Morgan has opened talks with institutional investors, such as pension funds and private equity firms, to raise capital for its C$6.8 billion Trans Mountain venture.

The company said its goals for 2017 include a joint venture or initial public offering of Trans Mountain, hoping that interest from the investment community will allow it to start construction in September.

What has all players - pipeline operators, producers, crude buyers and governments - on edge is what Trump means by his pledge to “tweak” the North American Free Trade Agreement, regardless of a joint statement issued earlier in February by Trump and Canadian Prime Minister Justin Trudeau that they are committed to “moving forward on energy-infrastructure projects.”

“We have built the world’s largest energy trading relationship (and) we share the goal of energy security, a robust and secure energy grid, and a strong and resilient energy infrastructure ...” they said.

But that leaves unresolved Trump’s plan for a border adjustment levy that could penalize Canadian exporters.

The threat has stirred action from Alberta Premier Rachel Notley, who will be in Washington, D.C., from Feb. 26 to March 1 to make her case to political and industry leaders for the importance of cross-border trade.

“With protectionism on the rise in the U.S., an export-driven economy like ours has to advocate for its interests,” she said.

Trade between Alberta and the U.S. totaled more than C$100 billion in 2015, 80 percent of it covering goods (mostly oil and natural gas) sent from Alberta, which Notley will argue is a vital lifeline to the U.S. economy.



Did you find this article interesting?
Tweet it
TwitThis
Digg it
Digg
Print this story | Email it to an associate.

Click here to subscribe to Petroleum News for as low as $89 per year.


Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.