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BC Gas, Enbridge tussle over rights to ship oil sands production Producers Conoco, TrueNorth Petro-Canada and Canadian Natural Resources are looking for shipping options for another 700,000 barrels per day of output from northern Alberta; Enbridge studies new markets in California, Asia-Pacific Rim Gary Park PNA Canadian Correspondent
With a multi-billion-dollar wave of oil sands projects under way in Alberta and even more on the horizon, there is growing urgency to build pipelines and refineries to handle the flood of new production, the bulk of which is destined for U.S. markets.
The pipeline race is pitting Calgary-based Enbridge Inc. and Vancouver-based BC Gas Inc. against each other in pursuit of new outlets for heavy and synthetic crude as both cast an eye to California and the Asia-Pacific Rim.
The battle for business involves several producers, notably Conoco Canada Ltd., TrueNorth Energy Inc., Petro-Canada and Canadian Natural Resources Ltd., who are in talks with unnamed potential shippers to carry upwards of 700,000 barrels a day expected to come on stream in the next six years. Pipeline contest public In recent weeks the pipeline contest has gone public, with BC Gas staking a claim as the next major pipeline company to build a delivery system from northern Alberta.
Through its wholly owned subsidiary Bison Pipeline Ltd., BC Gas is working on joint engineering and technical studies with potential shippers, including TrueNorth and Petro-Canada.
Bison plans to invest more than C$800 million on a 310-mile line from TrueNorth’s site near Fort McMurray in northeastern Alberta through Petro-Canada’s site to Edmonton. Initial capacity is targeted at 100,000 barrels per day, with ultimate capacity set at 450,000 barrels per day.
A Bison spokesman said the massive investment expected in the Athabasca region means the pipeline “would not be enough anyway. As a pipeline company we’re just trying to capture some of those opportunities. I am assuming that other pipeline companies would want to do the same thing.”
TrueNorth is aiming for first-phase production of 95,000 barrels per day from its C$2 billion project in 2005, with output doubling by 2008. Petro-Canada has two projects it hopes will yield 110,000 barrels per day in 2006. Both say they are still negotiating with other pipeline companies.
For BC Gas, Bison represents a second project in the bitumen region. It has just completed its Corridor Pipeline, operated by subsidiary TransMountain Pipe Line Co., to carry 215,000 barrels per day from Shell Canada Ltd.’s new oil sands operation to an Edmonton refinery. Enbridge looking at other pipelines In its low-key manner, Enbridge is looking to build on its Athabasca line, which has capacity to move 570,000 barrels per day, but is currently shipping only about 100,000 barrels per day for Suncor Energy Inc.
An Enbridge spokesman says Athabasca’s full capacity should be attained within about five years.
Meanwhile, the company has its eyes set on opening up alternative markets in California and the Asia-Pacific Rim by studying the netbacks of a possible 400,000-barrel-per-day pipeline to the British Columbia coast.
Richard Bird, vice president for transportation north, said a full feasibility study is under way to seek a “relief valve” for producers from the crowded U.S. Midwest markets.
Based on early “high level” findings, the expected netbacks from the California region compare favorably with the U.S. Midwest, he said.
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