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California firm joining Alberta oil sands rush Company turning two Alberta pipelines into part of new corridor to U.S. Rocky Mountain refineries; strong believer in synthetic crude future Gary Park Petroleum News Calgary Correspondent
Pacific Energy Partners, a California-based mid-stream company, is turning a toehold into a foothold as it secures a position in the transportation of oil sands crude from Alberta.
The master limited partnership concluded its C$31.5 million purchase of the 7,000 barrel-per-day Mid Alberta Pipeline from Imperial Oil on June 30 just a month after finalizing a C$156 million acquisition of BP Canada’s 38,000 bpd Rangeland pipeline system.
It now plans to combine the two lines which serve as a gathering network for rapidly declining conventional crude production in central and southern Alberta.
Pacific Energy said it will convert the new entity into a mainline carrying synthetic crude from Edmonton to the U.S.-Canada border, where it will feed into the company’s U.S. Rocky Mountain pipelines that serve 14 refineries, with combined capacity of 600,000 bpd.
“Producers in Alberta and refiners in the U.S. Rocky Mountain region have already shown great interest in this new pipeline corridor,” Pacific Energy chief executive officer Irv Toole said in a statement.
“Producers have a need to find additional outlets for their growing oil sands production and refiners need to replace supplies of conventional crude oil that are declining,” he said. Upgrades to meet western U.S. refinery specifications Toole said oil sands producers have invested heavily in upgrading and customizing their synthetic crude oil blends to meet specifications for western U.S. refineries.
“We expect this new pipeline corridor (to the Rocky Mountain refineries) to be successful because it will allow Pacific Energy to participate in a meaningful way in meeting the increasing crude oil requirements of U.S. Rocky Mountain refineries by accessing new synthetic oil supplies in Edmonton.”
In light crude service, the Mid Alberta pipeline has capacity of about 50,000 bpd, while Rangeland can carry 85,000 bpd to the international border — three times the current utilization.
Pacific Energy also said that over the next year it will build a new initiating terminal with multiple pipeline connections in Edmonton.
The California pipeline has made its entry at a time when two of Canada’s largest carriers, Enbridge and Terasen, are exploring a variety of plans to deliver more oil sands volumes to the U.S. and the British Columbia coast, some for possible export to Asia.
Oil sands producer Suncor Energy also bought a ConocoPhillips refinery in Denver a year ago and is retrofitting the 62,000 bpd plant as a U.S. outlet for its production.
The momentum to step up the provision of downstream facilities comes from forecasts that oil sands production will grow to 80 percent of Alberta’s total oil output within a decade.
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