2018 Canadian Oil Pipeline Report: KXL, Trans Mountain Lead the Way

By Brad Kramer March 13, 2018 View Profile

In October last year, the Canadian pipeline sector received a major blow as TransCanada Corp. was forced to cancel the Energy East Pipeline and Eastern Mainline projects. However, hope remains as two other major projects continue to clear hurdles in the development process.

After years of regulatory hurdles and opposition from environmental groups, TransCanada informed the Canadian National Energy Board (NEB) and Quebec’s Ministry of Sustainable Development, Environment, and Action Against Climate Change that it would withdraw its applications for the projects that represented about $1 billion of investment.

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In response, the Canadian Energy Pipeline Association (CEPA) announced that it was “extremely disappointed” with the termination of the projects.

“TransCanada was forced to make the difficult decision to abandon its project, following years of hard work and millions of dollars in investment,” said CEPA president and CEO Chris Bloomer in a statement released Oct. 5, 2017. “The loss of this major project means the loss of thousands of jobs and billions of dollars for Canada, and will significantly impact our country’s ability to access markets for our oil and gas.

Bloomer blamed TransCanada’s decision on the NEB Energy East Panel’s decision to consider upstream and downstream greenhouse gas (GHG) emissions for the projects. “This is evidence of how a lack of clarity and an unclear decision-making process regarding pipeline projects in Canada are challenging the energy sector’s ability to be competitive in the world market,” he said.

While the Energy East and Eastern Mainline projects were scrapped, however, TransCanada’s long-delayed Keystone XL and Kinder Morgan’s massive Trans Mountain Pipeline Expansion projects continue to progress through the regulatory maze on the way toward construction.

Nebraska approved a route for the Keystone XL, albeit not the route TransCanada wanted, and the NEB ruled that Trans Mountain could bypass a couple bylaws that sprung up in a British Columbia city to temporarily halt the project. Keystone XL still has more hurdles to clear in the States, while pipeline construction is expected to begin on the Trans Mountain project this summer.

Additional crude oil pipeline projects remain in the works as the construction season is around the corner. What follows are highlights regarding projects to expand Canada’s crude oil transportation infrastructure that are under way, awaiting approval from the Alberta Energy Regulator (AER) or Canadian National Energy Board (NEB) or still in the planning stages.

While it may not seem like there are many pipelines represented, natural gas pipelines appear to be on the rise. North American Oil & Gas Pipelines will feature the major Canadian natural gas pipeline projects under development in the July/August Issue.

Keystone XL

Location: Alberta to U.S. Midwest and Southeast
Stakeholder(s): TransCanada
Overview: The long-delayed Keystone XL pipeline project is a proposed 1,179-mile, 36-in. diameter crude oil pipeline from Hardisty, Alberta, to Steele City, Nebraska. At an estimated cost of $5.3 billion (USD), the pipeline will transport crude oil from Canada, as well as the Bakken shale region of Montana and North Dakota. The pipeline will have capacity to transport 830,000 bpd to Gulf Coast and Midwest refineries. In November, the Nebraska Public Service Commission approved Keystone XL. TransCanada filed a motion to amend the route, but the commission denied the request in December. The company announced in January that it has received commercial support for the pipeline. Finally, in a Feb. 15 financial disclosure report for 2017, TransCanada said it supported the November decision by the Nebraska Public Service Commission for the approved route. There is no timeline for construction to begin or an estimated in-service date.

Line 3 Replacement

Location: Alberta, Saskatchewan, Manitoba
Stakeholder(s): Enbridge
Overview: Enbridge’s proposed Line 3 Replacement Program involves replacement of all remaining segments of its Line 3 pipeline between Hardisty, Alberta, and Superior, Wisconsin, along with construction of associated facilities. The project involves replacing existing 34-in. diameter pipe with 36-in. diameter pipe from Hardisty to Gretna, Manitoba, and Neche, North Dakota, to Superior. Segments of Line 3 from the U.S.-Canada international border to Neche, and near the Minnesota-Wisconsin border to Enbridge’s Superior Terminal, will be replaced with 34-in. diameter pipeline, and are under separate segment replacement projects. The Canadian government approved the project in November 2016. Upon completion, the pipeline is expected to have an initial capacity of 760,000 bpd and is expected to cost $5.3 billion (CAD). The project is expected to be completed and in service by 2019.

Construction on Enbridge’s Line 3 Replacement Program progresses in Alberta and Saskatchewan in 2017. The project has a targeted completion date of 2019 and will fully replace 1,660 km of one of the primary conduits in Enbridge’s Mainline crude oil network, between Hardisty and Superior, Wisconsin. In Canada, this $5.3 billion project will create thousands of jobs, generate hundreds of millions of dollars in tax revenue and contribute billions to the gross domestic product (GDP) of Canada.

Trans Mountain Expansion Project

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 Trans Mountain 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 as part of the Anchor Loop Project. Approximately 158 km of pipeline was twinned between Hinton, Alberta, and Hargreaves, British Columbia. Now, the company is proposing a $5.4 billion expansion of its current 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 the nominal capacity of the system from 300,000 bpd to 890,000 bpd. Kinder Morgan conducted an open season from fall 2011 to fall 2012 and received strong binding support. In January 2013, the company signed new long-term contracts with 13 committed customers. The company filed an application with the NEB in December 2013. Following a 29-month review, NEB concluded the project to be in the interest of the Canadian public in May 2016. The Canadian government approved the project in November 2016. The NEB ruled in December 2017 that the Trans Mountain project did not have to comply with two sections in the bylaws of the city of Burnaby, British Columbia, allowing the project to proceed. Terminal construction began in October last year, and pipeline construction is expected to begin this July, with expansion operations to begin in late 2019.

Upland Pipeline Project

Location: Manitoba, Saskatchewan and North Dakota
Stakeholder(s): TransCanada
Overview: TransCanada is proposing to construct, own and operate the Upland Pipeline to connect Williston Basin crude oil from various production areas in North Dakota, Saskatchewan and Manitoba to oil transportation connection points near the Manitoba-Saskatchewan border in Canada. The proposed pipeline would begin southwest of Williston, North Dakota, cross the Canada-U.S. border near Flaxton, North Dakota, and end near the Manitoba-Saskatchewan border in Canada. The project would include approximately 400 km of 20-in. pipeline and related facilities, including valve sites, tanks and new pump stations along the proposed route. The pipeline would transport up to 300,000 bpd of crude and is scheduled to be in-service in 2020.

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 neb-one.gc.ca or the AER site at aer.ca.
North American Oil & Gas Pipelines provides quarterly updates of oil and gas pipeline projects in the United States in Canada. The next update will be May, covering U.S. oil pipeline projects.