... 2014 Canadian Oil Pipelines Report

2014 Canadian Oil Pipelines Report

Pipeline Report SealWhether to U.S. Markets or Abroad, Oil Sands Drive Pipeline Expansion

While Canadian Foreign Affairs Minister John Baird has called for the United States to quit dawdling and make a decision about TransCanada’s Keystone XL pipeline, the country’s National Energy Board has taken a major step toward approving Enbridge’s Northern Gateway Project. The first project will make a major impact on how Canadian crude oil is transported to the United States, the biggest customer of the world’s third biggest oil resource. The latter project will improve infrastructure to transport crude off continent to the Asian markets.

In a Jan. 16 speech to the U.S. Chamber of Commerce, Baird said it was time for the United States to end the “state of limbo” regarding Keystone XL, urging a decision no matter if it’s for or against the pipeline. U.S. Secretary of State John Kerry said there was no hurry to decide, but his department soon afterward released the latest report on the project, stating that it would not significantly impact greenhouse gas emissions.
Regardless of whether the U.S. government approves the pipeline or not, the Canadian energy industry is dedicated to developing the oil sands and transporting it to market, whether by pipeline, ship or rail.

Canadian Oil Pipelines Report

Whether to U.S. Markets or Abroad,
Oil Sands Drive Pipeline Expansion

/*** Advertisement ***/

“The U.S. could become net North American self-sufficient in its oil requirements in about a decade,” Baird said. “But to achieve this, new infrastructure will have to be built.”
Within its own borders, the Canadian government is seeking other fruitful markets for its crude oil. The Northern Gateway project would include the construction of two 1,170-km pipelines from Bruderheim, Alberta, to the seaport of Kitimat, British Columbia, where Enbridge also proposes to build and operate the Kitimat Marine Terminal. The project would provide increased market access for Canadian crude oil through the country’s shipping channels. The NEB Joint Review Panel released its recommendations on the project in December, marking an important milestone in the project’s development.

“Although no final decision or certificate has been issued yet, pipeline and facilities projects, such as Northern Gateway, could potentially provide Canadians with increased market access,” said Brenda Kenny, president and CEO of the Canadian Energy Pipeline Association (CEPA). “Our industry needs access to markets, and in full consideration of this public interest, we hope there will be a positive outcome for all proponents in the future.”

The NEB recommended that the Canadian government approve the project pending 209 conditions, cited in its report. A final decision on the project is expected by July.
Canadian pipeline companies are also considering projects that move product eastward to the dense population centers in Ontario and Quebec. New pipelines and initiatives to expand current capacity to these regions are major driving factors in project development.

There are a number of oil pipeline projects currently under construction or awaiting approval from the Canadian government, many of which will expand already existing transportation systems that transport crude from the oil sands to various markets. What follows is an overview of those projects and their current progress:

Alberta Clipper Expansion
Location: Alberta, Manitoba
Stakeholder(s): Enbridge
Overview: Due to increasing demand for pipeline capacity, Enbridge is proposing to expand capacity to its existing Line 67 (initially known as the Alberta Clipper Pipeline) from 450,000 barrels per day (bpd) to 570,000 bpd. The Canadian portion of Line 67 is 1,078 km and transports crude oil from the company’s Hardisty Terminal in Alberta to the Gretna Station in southern Manitoba. Line 67 then connects at the international border to the U.S. portion of the system and continues to Superior, Wis. The pipeline capacity expansion includes installation of one new mainline pump at eight facilities, four new mainline pumps and an electrical substation at the Metiskow Station and an addition of a metering terminal and booster pump at the Hardisty Terminal.
Progress: Enbridge received approval from the NEB in February 2013 to proceed with the project. Construction began in June 2013. Work is expected to be completed and in service by July.

Athabasca Pipeline Twinning
Location: Alberta
Stakeholder(s): Enbridge Athabasca
Overview: Enbridge is proposing to develop a new 345-km, 36-in. crude oil pipeline to provide transportation service for increased oil production in the Kirby Lake area in Alberta. The new pipeline would generally follow the company’s existing Athabasca Pipeline right-of-way, starting at the Kirby Lake Terminal, near Winifred Lake, Alberta, and ending at the Battle River Terminal, located in the Hardisty crude oil hub area. The project also involves two new pump stations.
Progress: Enbridge Athabasca submitted an application for the project to the Alberta Energy Resources Conservation Board (ERCB) in March 2012 and received approval in November 2012. The company began clearing sections of right of way in December 2012, with construction beginning in the summer of 2013. The planned pipeline in service is January 2015.

Edmonton-Hardisty Pipeline
Location: Alberta
Stakeholder(s): Enbridge
Overview: Enbridge proposes to construct and operate a 181-km, 36-in. pipeline to transport crude oil from the company’s existing Edmonton Terminal to its Hardisty Terminal. The project also includes the construction and operation of a new pump station at the Edmonton Terminal, construction and operation of two new pump stations at its existing Kingman and Strome stations, as well as associated facilities and infrastructure at its Edmonton and Hardisty terminals. The proposed pipeline right-of-way will be alongside and contiguous to an existing Enbridge pipeline right-of-way and other linear disturbances for approximately 96.6 percent of its length. If approved, the pipeline would deliver crude oil to other existing pipelines and facilities located in the Hardisty area, including delivery onto the Enbridge Mainline system.
Progress: Enbridge received NEB approval on Jan. 30. Construction is expected to begin in the third quarter of 2014, with a projected in-service date in the first quarter of 2015.

Energy East Pipeline
Location: Alberta, Saskatchewan, Manitoba, Ontario, Québec and New Brunswick
Stakeholder(s): TransCanada
Overview: TransCanada has proposed a 4,500-km pipeline to carry 1.1 million bpd of crude oil from Alberta and Saskatchewan to refineries in eastern Canada. The project would involve converting an existing natural gas pipeline for oil transportation, constructing new pipelines in Alberta, Saskatchewan, Manitoba, Ontario, Québec and New Brunswick to link up with the converted pipeline, and constructing the associated facilities, pump stations and tank terminals required to move crude oil from Alberta to Québec and New Brunswick, including marine facilities that enable access to other markets by ship. The exact route will be determined after public and regulatory review, but the planned starting point is a new tank terminal in Hardisty, Alberta. Three other new terminals will be built along the pipeline’s route, in Saskatchewan, the Québec City area and the Saint John, New Brunswick, area.
Progress: TransCanada expects to file for regulatory approval later this year. Preliminary in-service dates for Montreal and Quebec City are set for mid-2017 and for Saint John in late 2018.

Grand Rapids Pipeline
Location: Alberta
Stakeholder(s): TransCanada, Phoenix Energy Holdings Ltd.
Overview: TransCanada has entered into binding agreements with Phoenix Energy Holdings to develop the Grand Rapids Pipeline in northern Alberta. Each company will own 50 percent of the proposed $3 billion project that includes both a crude oil and a diluent line to transport volumes approximately 500 km between the producing area northwest of Fort McMurray and the Edmonton/Heartland region. The system will have the capacity to move up to 900,000 bpd of crude oil and 330,000 bpd of diluent. TransCanada will operate the system and Phoenix has entered a long-term commitment to ship crude oil and diluent on it. The final Grand Rapids Pipeline route and design will be determined with Aboriginal and stakeholder input, as well as consideration for environmental, archaeological and cultural values, land use compatibility, safety, constructability and economics. The project will be constructed, owned and operated by the Grand Rapids Pipeline LP, which is jointly owned by Phoenix and a wholly owned subsidiary of TransCanada.
Progress: Grand Rapids Pipeline applied for regulatory approval for the project in 2013. Pending AER approval, the pipeline is expected to be in service by early 2017, with capital spent between 2014 and 2017.

Heartland Pipeline
Location: Alberta
Stakeholder(s): TransCanada
Overview: TransCanada has reached binding long-term shipping agreements to build, own and operate the proposed Alberta-based Heartland Pipeline and TC Terminals projects. The projects are being developed to support growing crude oil production in Alberta and will include the 200-km Heartland Pipeline connecting the Edmonton region to facilities in Hardisty, Alberta, and a terminal facility in the Heartland industrial area north of Edmonton. The pipeline could ultimately transport up to 900,000 bpd of crude oil, while the terminal is expected to have storage capacity for up to 1.9 million barrels of crude oil. The projects have a combined cost estimated at $900 million.
Progress: After conducting a feasibility study in the fall of 2012, TransCanada has been working with stakeholders and Aboriginal communities to gather input. On Oct. 25, 2013, Heartland Pipeline GP Ltd., a wholly owned subsidiary of TransCanada, filed an application with the AER to construct, own and operate the Heartland Pipeline. Pending regulatory approvals, construction of the pipeline and associated pipeline installations is anticipated to commence in the fall of 2014 with an expected in-service date in the second half of 2015.

Northern Courier Pipeline
Location: Alberta
Stakeholder(s): TransCanada Corp., Fort Hills Energy LP
Overview: TransCanada was selected by Fort Hills Energy to design, build, own and operate the proposed $660 million Northern Courier Pipeline project, which comprises a 90-km pipeline to transport bitumen and diluent between the Fort Hills mine site and the Voyageur Upgrader located north of Fort McMurray, Alberta. The pipeline is fully subscribed under long-term contract to service the Fort Hills mine, which is jointly owned by Suncor Energy Inc., Total E&P Canada Ltd. and Teck Resources Ltd., and is operated by Suncor Energy Operating Inc. Northern Courier is conditional on and subject to the Fort Hills project receiving sanction by its co-owners and obtaining regulatory approval.
Progress: TransCanada has started engaging with Aboriginal communities and stakeholders about the pipeline route and has initiated environmental field studies. In April 2013, the company filed an application with the Alberta Energy Regulator (AER), formerly the Energy Resources Conservation Board (ERCB). Pending all required regulatory and project approvals, construction is expected to begin in 2014, with an in-service date of mid-2016.

Northern Gateway Pipeline
Location: Alberta, British Columbia
Stakeholder(s): Enbridge
Overview: The proposed Northern Gateway system includes two 1,177-km pipelines from Alberta to the British Columbia coastline, with associated storage tanks and terminals. The $5.5 billion, 36-in. diameter oil pipeline would carry 525,000 bpd of crude from Edmonton, Alberta, to Kitimat, British Columbia, to be shipped to Pacific Rim countries or U.S. markets on the West Coast. The second pipeline (20-in. diameter) would transport 193,000 bpd of natural gas condensate eastward.
Progress: The NEB Joint Review Panel has recommended approval of the project. A final decision by the Canadian government is expect in July. Construction is expected begin in 2014, with an in-service date of 2017.

Pembina Phase III Expansion
Location: British Columbia, Alberta
Stakeholder(s): Pembina Pipeline
Overview: Pembina Pipeline Corp. plans to proceed with constructing approximately $2 billion in pipeline expansions. The 540-km Phase III Expansion will follow and expand upon certain segments of the company’s existing pipeline systems from Taylor, British Columbia, southeast to Edmonton, Alberta, to fulfill capacity needs. The core of the project involves the construction of a new 270-km, 24-in. diameter pipeline from Fox Creek, Alberta, to the Edmonton area, which is expected to have an initial capacity of 320,000 bpd and an ultimate capacity of more than 500,000 bpd with the addition of midpoint pump stations. The expansion may also include increasing pipeline interconnectivity between Edmonton and Fort Saskatchewan to provide access to a variety of delivery points including fractionators, refineries and storage hubs and increased access to pipeline and rail take-away capacity.
Progress: Pembina expects to begin consulting with First Nations and the public in early 2014. The project is expected to be in service between late 2016 and mid-2017, subject to environmental and regulatory approvals.

Trans Mountain Expansion
Location: Alberta, British Columbia
Stakeholder(s): Kinder Morgan
Overview: For more than 60 years, the Trans Mountain Pipeline system has been providing the only West Coast pipeline access for Canadian oil products. From the time when it was first constructed in 1953, the pipeline system has adapted to meet the growing needs of customers. The pipeline system was most recently expanded in 2008, with approximately 158 km of pipeline being twinned between Hinton, Alberta, and Hargreaves, British Columbia. Now, the company is proposing an expansion of the 1,150-km pipeline between Strathcona County, Alberta (near Edmonton), and Burnaby, British Columbia. The proposed expansion would create a twinned pipeline that would increase capacity from 300,000 bpd to 890,000 bpd.
Progress: In January 2013, Kinder Morgan signed new long-term contracts with 13 customers. The company filed an application with the NEB on Dec. 16, 2013. Construction could begin as early as 2015 or 2016, with an in-service date in late 2017.

Woodland Pipeline Extension
Location: Alberta
Stakeholder(s): Enbridge, Imperial Oil Ltd.
Overview: The Woodland Pipeline is a 137-km, 36-in. pipeline that went into service in September 2012 to transport crude oil from the Kearl oil sands to the Cheecham Terminal, with an initial pipeline capacity of 200,000 bpd. Enbridge is developing a 385-km, 36-in. pipeline to extend the Woodland Pipeline. The project would also include two new two new pump stations.
Progress: The ERCB approved the project in August 2012. Enbridge continues to complete design and engineering details. Construction began in the fall of 2013, with an expected in-service date of spring 2015.

This is not a comprehensive list of the oil pipeline projects in Canada. For more information about these and other projects, you can visit the NEB website at www.neb-one.gc.ca or the AER site at www.aer.ca.

North American Oil & Gas Pipelines provides quarterly updates of oil and gas pipeline projects in the United States and Canada. The next update will be in May, covering U.S. oil pipelines.

Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him at bkramer@benjaminmedia.com.