Page 4 - NorthAmOil Week 48

NorthAmOil COMMENTARY NorthAmOil
Pipeline progress heralds relief for Canada’s oil sands producers
Enbridge has started up the Canadian portion of its Line 3 replacement, while other efforts to add to Western Canadian takeaway capacity are also underway
CANADA
WHAT:
Canadian oil sands producers are being provided with some relief from pipeline bottlenecks at last.
WHY:
Enbridge has brought the Canadian portion of its Line 3 replacement into service.
WHAT NEXT:
Construction on the Trans Mountain expansion is also set to begin soon after numerous delays.
NEW pipeline capacity out of Western Canada has started coming online, providing much- needed relief to oil sands producers, which have been struggling with a lack of takeaway capacity, resulting in lower prices for their crude.
Calgary-based Enbridge brought the Cana- dian portion of its Line 3 pipeline replacement into service on December 1. While the US por- tion of the giant replacement project continues to be held up by regulatory delays in Minnesota, the start-up of the Canadian section, which runs from Alberta to Manitoba, has been hailed as a major step forward.
The 1,070-km (665-mile) Line 3 replacement is the largest project Enbridge has ever under- taken, with the total cost anticipated to reach CAD9bn ($6.8bn). The Canadian portion of the pipeline is estimated to account for around CAD5.3bn ($4.0bn) of this. When the US por- tion of the project is up and running, capacity on the replacement will reach 760,000 barrels per day (bpd) – roughly double the volume being transported on the original Line 3.
The segment that came online last week has only added 10,000 bpd of capacity out of West- ern Canada for now, though this will be ramped up further. Enbridge said in a statement that the Canadian segment would operate at half its total
capacity, or roughly 400,000 bpd, until the Min- nesota portion is approved, built and brought online.
Even without the US segment, the capacity boost will be welcomed by Canadian producers, given that a shortage of new pipelines has been one of the most significant factors constraining growth of oil sands output recently. Bringing the Canadian portion of the Line 3 replacement into service comes as Enbridge and other pipeline operators are also taking other steps to expand pipeline capacity out of the country.
Enbridge has said that it expects to add another 90,000 bpd by the end of December through optimisation projects on its oil pipe- line network and by using drag-reducing agents to allow more crude to flow through its pipes. Another pipeline operator, TC Energy, is using similar measures to add 50,000 bpd of capacity out of Canada by the end of 2019.
Meanwhile, a push for more crude-by-rail transportation, including the Alberta govern- ment’s ongoing efforts to offload its rail contracts onto the private sector, would also help boost takeaway capacity.
Cautious optimism
There is still a long way to go, including for the
Source: CBC News
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w w w . N E W S B A S E . c o m Week 48 04•December•2019