Page 4 - NorthAmOil Week 31

NorthAmOil COMMENTARY NorthAmOil
Canadian pipeline operators
add capacity for more crude
to reach US refiners
Pipeline operators are nding ways to expand capacity on their existing lines in order to send more Canadian crude to the US, writes Anna Kachkova
CANADA
WHAT:
Pipeline operators
are adding capacity to pipelines from Canada to the US.
WHY:
Demand for heavy crude is rising in the US and globally owing to sanctions on Venezuela and Iran.
WHAT NEXT:
Major new pipeline projects are still experiencing delays, which could affect Canadian oil prices.
PIPELINE operators are nding ways of sending more Canadian oil to US re ners, despite the fact that no major new pipelines are coming online, and any proposals tend to be held up by regula- tory delays and litigation. No major new projects are expected to start up until 2020, or beyond, if further delays occur.
“ e pipeline companies are getting pretty creative on how they’re expanding some capacity out of the country,” Cenovus Energy’s executive vice president of downstream, Keith Chiasson, said on the company’s second-quarter earn- ings call. ese pipeline companies include TC Energy and Enbridge, as well as the Canadian subsidiary of Plains All American Pipeline, all of which have recently unveiled plans to increase capacity on some of their pipelines from Canada to the US.
TC Energy has said it will o er up to 50,000 barrels per day (bpd) of new capacity on its Keystone pipeline from next year by using drag resistance agents to ease ows through the sys- tem. is will allow the company “to respond to the demand for additional transportation capac- ity for crude oil from western Canada to the US Gulf Coast,” a TC Energy spokesman, Jamie Har- ding, told Bloomberg.
Enbridge is using similar methods to add extra capacity to its system, which is the larg- est in North America, by early 2020. In July the company launched an open season to support a 50,000 bpd expansion of the Express pipeline. e expansion forms part of an overall strategy to add about 135,000 bpd of extra capacity to Enbridge’s system. Under this strategy, Enbridge is also planning to deliver roughly 85,000 bpd of incremental throughput on its Mainline in late 2019. e company said in its second-quar- ter earnings that the additional flows would “through crude delivery and receipt window e ciencies, optimisation of crude quality slates, as well as the recovery of Line 4 capacity, which hadbeenpreviouslyplannedforinearly2020”.
Meanwhile, Plains Midstream Canada announced a proposed expansion of its Range- land crude pipeline system in July. e expan- sion, which will come online in phases from the second half of this year, is expected to provide incremental southbound takeaway capacity of 80,000 bpd out of the Edmonton market hub when it reaches full capacity in in 2021.
“We remain focused on leveraging our exist- ing systems in creative ways to meet the grow- ing needs of our customers,” Plains Midstream Canada’s executive vice president of commercial, Tyler Rimbey, said in a statement.
Meeting demand
The efforts to add takeaway capacity come
a er US demand for Canadian heavy crude
has risen this year, bolstered by US sanctions
on Venezuela. is is also driving up demand
for heavy crude globally, along with tightened
sanctions on Iran. Indeed, a cargo of Cana-
dian Kearl crude was shipped from the US The pipeline Gulf Coast to Malaysia in July, marking the
rst such shipment in ve years. Speaking to Bloomberg, Auspice Capital Advisors’ founder and chief investment o cer, Tim Pickering, described the demand from re ners for heavy crude as “unrelenting”.
This rise in demand comes as a welcome they’re expanding
trend for Canadian producers, which have struggled to operate as Western Canadian Select (WCS) benchmark prices have traded at a dis- count to US WTI. e discount was at its widest late last year, rising to around $50 per barrel. is prompted the previous Alberta government, which was voted out in April, to impose manda- tory curtailments on production in the province. e move prompted a mixed response, though producers now appear to be more united in sup- porting an end to the cuts. And indeed they are in the process of being eased, though there are concerns this could put downward pressure on local prices once again. On July 26, the Alberta
some capacity
out of the
country.
Keith Chiasson
Executive Vice President of Downstream Cenovus Energy
companies are getting pretty creative on how
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w w w . N E W S B A S E . c o m Week 31 08•August•2019