Enbridge notches Line 9, Line 9B success

Once in service pipeline will move 300,000 bpd from US Bakken, Western Canada; opponents continue to question economic value

GARY PARK

For Petroleum News

Enbridge is within sight of launching a pipeline project that will deliver 300,000 barrels per day of crude from the United States Bakken and Western Canada to refineries in Ontario and Quebec, shunting aside offshore supplies in the process.

Canada’s National Energy Board has given final approval to the Line 9 and Line 9B project, whose costs have climbed by C$100 million to an expected C$800 million because of delays imposed by the NEB since its initial approval 18 months ago.

The NEB said there are “no further NEB pre-operation requirements,” although the pipeline will face “strict conditions” when it becomes operational including bi-weekly ground patrols and quarterly integrity testing, plus an in-line inspection within the first year of operation.

But, regardless of those unprecedented standards, opponents of the project continue to question the economic benefits its backers have promised, targeting the risks and costs of a pipeline rupture in an urban area or a water body.

Many environmental groups have also joined the North American-wide crusade to slow or stop the growth of Canadian oil sands production.

Although Line 9 will carry mainly light crude, shippers will be permitted to ship heavy crude such as diluted bitumen, sourced from the oil sands.

Prolonged regulatory process

Valero’s 265,000 bpd Jean-Gaulin refinery in Levis, Quebec, welcomes the chance to shunt aside pricey feedstock it imports from the U.S. Gulf Coast, Europe and Africa with cheaper Canadian crude.

A spokeswoman said half of the supplies will soon come from Western Canada, giving the refinery its first opportunity to access Canadian crude.

Valero has spent C$200 million on upgrading its Levis facility to handle heavier crudes.

“It is a really good decision for us from a competitive standpoint,” the spokeswoman said.

Suncor described the Line 9 undertaking as “critical infrastructure” to will give the company’s 137,000 bpd Montreal refinery in Montreal access to North American crude, including the option to use heavy crude from its own oil sands operations.

Turnaround date not clear

“Once Line 9 is returned to service, our goal is to operate it safely as we have done for close to 40 years,” an Enbridge spokesman said.

“There are some technical preparations that are required and line fill is not exactly a timed process,” he said.

Line 9 is an existing 30-inch diameter line with current capacity of 240,000 bpd that will be increased by 60,000 bpd. Since 1998 it has carried foreign crude from Montreal to the Sarnia, Ontario, refinery terminal.

The Line 9B project will reverse the segment of Line 9 between North Westover, Ontario, and Montreal, plus the expansion of the Line 9 capacity.

When it comes into service the project will be partial relief for Canadian producers in their struggle with low oil prices and the inability of Enbridge, TransCanada and Kinder Morgan to obtain approvals for pipelines to access new domestic and global markets.

What was initially seen as a straightforward undertaking, Line 9 has reflected the new age of public resistance to moving crude anywhere, resulting in Suncor Chief Executive Officer Steve Williams in September publicly blasting the “stupidity” of pipeline politics in the United States and Canada.