Page 8 - NorthAmOil Week 04 2021

NorthAmOil PIPELINES & TRANSPORT NorthAmOil

Keystone XL’s demise

boosts importance of

other pipelines

NORTH AMERICA US President Joe Biden’s cancellation of the
cross-border permit for the Keystone XL pipe-
line last week means that other pipeline projects
providing takeaway capacity from Canada’s oil
sands have assumed greater importance. The
focus is now on Enbridge’s Line 3 replacement
project, which recently received its final out-
standing permit in Minnesota, and the Trans
Mountain expansion, which the Canadian gov-
ernment bought from Kinder Morgan in 2018.
The Line 3 replacement is scheduled to come
online later this year, while the Trans Mountain
expansion is due to enter service in December
2022. Keystone XL’s demise has made their
completion all the more important for oil sands
producers.
“This pipeline is even more valuable now,”
the Western Indigenous Pipeline Group’s CEO,
Joe Dion, was quoted by Reuters as saying of
the Trans Mountain project on January 24. His
group is one of several First Nations groups
interested in buying Trans Mountain, which
Ottawa intends to offload once it ensures that the virtual conference this week that there was a
expansion project will be completed. He added, significant opportunity for Canada to fill the gap
however, that while the Trans Mountain expan- from declines from Mexico and Venezuela in the
sion takes on additional strategic importance in longer term.
the wake of Biden’s decision on Keystone XL, this Also this week, the Canada Energy Regulator
did not mean his group would pay more for it. (CER) reported that Canadian exports of crude
Project Reconciliation, a First Nations coali- by rail had risen 87% in November as oil pro-
tion, hopes to buy 51% in the project this year. duction came back online in Western Canada.
Project Reconciliation’s executive chair, Delbert The CER says rail shipments of oil amounted
It is thought Wapass, was quoted by Reuters as saying that “all to 173,000 barrels per day, up about 80,000 bpd
eyes” were on the Trans Mountain expansion.
from 92,800 bpd in October, but down from
that the Trans Canadian oil production has taken a hit as 302,300 bpd shipped by rail in November 2019.
Mountain a result of the coronavirus (COVID-19) pan- Crude by rail remains an option for pro-
demic, easing the pipeline capacity constraints ducers struggling to find takeaway capacity on
expansion that had been plaguing the oil sands recently. pipelines, but is more expensive than pipeline
But a recovery is underway, even with the risk shipments. As a result, it is only used if pipelines
and Line 3 of additional pandemic-related uncertainty, and are full or if destination markets are offering
there is an opportunity for Canadian volumes to significantly higher prices than can be achieved
replacements meet heavy oil demand on the US Gulf Coast. domestically.
Currently, it is thought that the Trans
“The US Gulf Coast is very short of heavy
will suffice to crude. There has been a big fall-off of Venezuelan Mountain expansion and Line 3 replacements
accommodate and Mexican supply. They’re paying even more will suffice to accommodate extra Canadian
for heavy oil than they were ten years ago relative crude volumes once they come online, with
extra Canadian to light oil,” the ARC Energy Research Institute’s the COVID-19 crisis coming on top of several
executive director, Jackie Forrest, was quoted by difficult years for the oil sands. Indeed, Reuters
crude volumes. Yahoo Finance as saying. She told the service that cited Tudor, Pickering, Holt & Co.’s director of
the fate of Keystone XL was less important to the infrastructure research, Matt Taylor, as saying
Canadian energy sector than strong underlying that even without Keystone XL, Canada may
trends for US demand and other pipeline expan- have surplus export pipeline capacity once the
sions currently in the works. Trans Mountain expansion enters service. Tay-
Separately, Enbridge’s senior vice-president lor expects only modest oil production growth
Phil Anderson said at the Argus Crude Live until 2025.™

P8 www. NEWSBASE .com Week 04 28•January•2021