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New contender for Alberta-Texas pipe link Newly formed Canadian company plans $3 billion 250,000 bpd heavy oil and bitumen pipeline to U.S. Gulf Coast refineries Gary Park Petroleum News Canadian Contributing Writer
Toss another name in the mix of companies competing to move oil sands production out of Alberta.
Out of the blue, Altex Energy, a newly formed Canadian company, has unveiled plans to build and operate a US$3 billion system to carry 250,000 barrels per day of heavy oil and bitumen to the U.S. Gulf Coast refining hub.
That puts the privately owned upstart in a head-to-head contest with three well-established pipeline companies, Enbridge, TransCanada and Terasen (which is soon to be taken over by Kinder Morgan). Altex says its route shorter Altex claims it has an edge over its rivals by planning a shorter, direct route of some 1,800 miles to market, covering only two-thirds the distance of other projects, giving any shippers “a decided economic advantage in the marketplace.”
It says the proposed system “will be designed to complement and enhance the value of the scheduled investments in Alberta’s growing oil production infrastructure.
“It will link the resultant increased oil production to attractive markets in the U.S. Gulf Coast, the largest marketing North America.”
But Chief Executive Officer Jack Crawford, a veteran of the Canadian pipeline business, concedes that Altex is floating a new concept that is still in the “very early stages.”
Altex said it is working with potential shippers to integrate their project requirements, including production profiles and technologies, with its “advanced-technology pipeline system.”
Initial engineering, environmental and other design activities are under way to develop a detailed design.
Crawford said the Alberta-to-Texas line could be operational by 2010, depending on the response from shippers and refiners and assuming regulatory approvals in Canada and the United States. Core Altex managers involved in Alliance Crawford and three of Altex’s other core managers were involved in the Alliance natural gas pipeline from northern British Columbia to Chicago to remove a “gas bubble” in Western Canada.
That produced a heated battle with TransCanada, which had held a stranglehold on moving gas out of Alberta to Eastern Canada and the United States.
Alliance was launched in 1995 and completed in 2000 at a cost of C$5 billion. It covers almost 2,300 miles.
Altex’s founding shareholder is Kern Energy Partners I Fund, a Calgary-based private equity fund that invests in early stage and emerging energy companies.
The fund has C$230 million of committed capital from a group of limited partners, including North American pension funds, university endowments, institutions and family offices.
But some analysts question whether Altex has the financial muscle to overcome stiff competition from its better-known rivals, whose combined plans involve shipping 3.5 million bpd from the oil sands over the next decade — a volume greater than the forecast increase in volumes.
Crawford said Altex will need to raise a hefty sum to complete its project and may be forced to consider going public.
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