Pipeline progress and pain

Gary Park

for Petroleum News

The beat goes on in Canadian pipeline two-step.

Every hint of progress on one front seems to get dealt a setback on another.

The best news lately came from Enbridge, which expects the Canadian portion of Line 3 from Alberta to the U.S. Midwest will be fully operational by Dec. 1 and analysts are hopeful that U.S. regulatory barriers will be removed and open the way for deliveries to reach capacity of 370,000 barrels per day in the second half of 2020.

If that happens there will be some relief for the glut of oil sands bitumen trapped in Western Canada.

Those hopes are tied to a revised environmental impact statements from Minnesota regulators which are due for release by Dec. 9, allowing Enbridge to complete the replacement of an aging system at a cost of at least C$9 billion.

Enbridge Chief Executive Officer Al Monaco said his company is “putting more pipe in the ground to enhance overall safety and reliability of the system, giving us more operating flex.”

He also said Enbridge is on pace to free up an additional 100,000 bpd of pipeline capacity on its lines by the end of 2019 through optimization.

Separately, service has been restored on the existing Keystone pipeline which was shut for a week after an estimated 1.5 million liters of crude leaked from a rupture in North Dakota, one of the largest U.S. onshore spills in the past decade.

Without explaining what happens, operator TC Energy (formerly TransCanada), which is engaged in an endless regulatory and court battle to proceed with its 800,000 bpd Keystone XL link to the Texas refinery region, insisted that the “leak detection systems enabled us to remotely shut down the pipeline.”

The company said no concerns have been raised about air quality around the site, or the adjoining area.

But Canadian producers suffered from the fallout, which saw Alberta heavy crude prices get dragged down to about US$34 a barrel compared with about US$56 for West Texas Intermediate.

The U.S. Pipeline and Hazardous Materials Safety Administration has ordered TC Energy to provide an affected portion of the pipeline to testing by an independent laboratory.

- GARY PARK