Page 5 - NorthAmOil Week 31

NorthAmOil COMMENTARY NorthAmOil
government eased curtailments for September, setting the new limit at 3.76 million bpd.
By early August, the discount of WCS to WTI had narrowed to less than $20 per barrel. And new takeaway capacity additions – while fairly small compared to what the start-up of a major new pipeline would provide – will still relieve some of the pressure on Canadian prices in the short term. According to Pickering, ows on Enbridge’s Mainline are up 213,000 bpd from a year earlier since June. is comes as a result of the company’s ongoing e orts to optimise its pipeline system. Rail exports are also on the rise, with Canadian Natural Resources Ltd’s (CNRL) president, Tim McKay, saying they were forecast to reach 500,000 bpd.
“When you put the Enbridge mainline and increased rail, that’s what’s bringing in di eren- tials,”Pickeringsaidinreferencetothenarrower discount between WCS and WTI.
Cenovus is among those stepping up ship- ments of its output by rail. The company increased its crude-by-rail shipments to the Gulf Coast to average 36,000 bpd in the second quar- ter of this year, up from around 16,000 bpd in the rst quarter. Cenovus’ president and CEO, Alex Pourbaix, said on the company’s second-quarter earnings call that it remains on track to boost its rail capacity to around 100,000 bpd by the end of the year.
Hurdles
Nonetheless, Canadian producers will struggle to capture new market share even amid growing demand for heavy oil globally given how little additional takeaway capacity can be made avail- able at short notice.
“It’s important to note here that while
expanding rail capacity is critical to resolving Alberta’s near-term market access issues, we still need new pipelines,” Pourbaix said.
Some longer-term relief could be on the hori- zon with the completion of new pipeline pro- jects. TC Energy’s Keystone XL pipeline is slowly moving towards construction, and received a boost in late July thanks to the li ing of a court injunction that had stopped work on the project. is follows a June ruling from the US Court of Appeals for the Ninth Circuit that a new presi- dential permit negates challenges to the project’s earlier approval.
The Canadian government-owned Trans Mountain pipeline expansion project is also inching forward a er a number of delays. On August 1, the Canadian National Energy Board (NEB) allowed construction to resume this year attwoterminalslinkedtotheexpansionproject in Burnaby, British Columbia. Construction is also set to ramp up on the Burnaby Mountain Tunnel that will connect the two terminals.
However, NEB said the company’s request to also resume work at the Edmonton terminal has not yet been approved, as the regulator is still reviewing whether pre-construction conditions have been met at that site.
Local and environmental opposition to the Trans Mountain expansion remains strong and could lead to further delays.
Meanwhile, Enbridge has said that its Line 3 replacement will not enter service until late next year, putting it about 12 months behind schedule. In the meantime, there is a danger that downward pressure on WCS prices will result in di erentials widening again. If this happens, the Alberta government could nd itself forced to prolong output curtailments.™
On July 26, the Alberta government eased curtailments for September, setting the new limit at 3.76 million bpd.
Week 31 08•August•2019 w w w . N E W S B A S E . c o m
P5