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Kinder Morgan advances Asian plan Nine oil sands players support proposal to expand Trans Mountain pipeline to 750,000 bpd as company enters battle with Enbridge Gary Park For Petroleum News
Kinder Morgan has rounded up enough support from nine of the big players in the Alberta oil sands to file an application covering contracts, terms and tolls with Canada’s National Energy Board to expand its Trans Mountain pipeline to 750,000 barrels per day from 300,000 bpd as it formally enters battle with Enbridge to open a route to Asia.
It named the committed shippers after negotiating 20-year contracts to move 508,000 bpd on the existing pipeline from Edmonton to the Port of Metro Vancouver.
The remaining 20 percent of pipeline capacity would be made available to spot shippers.
The backers are BP, Canadian Oil Sands, Devon Energy, Cenovus Energy, Husky Energy, Statoil, Imperial Oil, Nexen and Tesoro. Among those left on the outside are Suncor Energy, the largest oil sands producer, and Canadian Natural Resources.
Suncor, MEG Energy, France’s Total and China’s Sinopec are all backers of Enbridge’s Northern Gateway proposal.
Regulatory approval sought Now Kinder Morgan is embarking on a showdown to gain regulatory approval, notably with municipal governments in the Greater Vancouver area, who oppose increased tanker traffic through the Vancouver port and British Columbia’s New Democratic Party, which is strongly placed to topple the Liberal government of Premier Christy Clark within the next year.
It can also expect the same resistance from environmentalists and First Nations that Enbridge is facing.
Ian Anderson, president of Kinder Morgan’s Canadian division, said the application seeks NEB approval for the “economic and commercial terms that underpin the economic viability of the project.”
He said a separate facilities and routing application to allow the twinning of Trans Mountain’s existing 60-year-old pipeline should be filed by late 2013.
A Kinder Morgan statement said the initial filing in advance of other project details will “provide regulatory and market certainty to customers and Trans Mountain about the future toll structure if the proposed expansion is approved.”
“The application would set the tolls and terms for 20 years, the same period for which customers signed contracts through the (booking) process.”
The company said that gaining toll approval will allow a switch from monthly bids to a toll structure committed to firm and spot capacity.
Issues similar to Enbridge’s Anderson said that “in many respects the issued that we are going to be facing aren’t much different than what Enbridge is experiencing and that is how do we reconcile local interests with national interests of expanding capacity on the West Coast?”
“Clearly, we are always going to have parties, for their own reasons, objecting to the expansion of pipeline capacity out of Canada and we’ll be meeting with those parties as well,” he said.
A spokeswoman for Cenovus, which is targeting output of 500,000 bpd by 2021, said the “biggest priority” for her company is to access new markets for its crude.
“The outcome for the pipelines is very, very difficult to predict,” said Steven Paget, an analyst with First Energy Capital. “The opposition to both is strong.”
He said that while Canadians seem willing to assume the risks associated with pipelines to gain access to the fuel, they are less inclined to give the same backing to exports, although he noted that although municipal governments will be able to intervene at NEB hearings they will not be able to veto approval of pipelines.
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