Friday 20 December 2013

Alberta Pipeline Update

(photo credit: Transcanada)

It's been a busy past couple of weeks on the Alberta pipeline front. Positive (and negative) news has an added inertial positive feedback effect on the other projects which adds some added interest to each incremental step. We know Obama has stipulated that XL's impact on GHG emissions will be a key determinant of approval. Which can be read as: whether or not the oil sands be developed at a significantly reduced rate with or without it. Every time we get closer to moving that bitumen by other means, we get closer to Obama's approval.

The southern leg of Transcanada's Keystone Pipeline network began filling and is expected to begin operations in early 2014. Enbridge currently moves 590,00 bopd through the Keystone from Hardisty to Cushing where Enbridge CEO Russ Girling says Canadian heavy oil will now have the option of continuing on the southern leg for delivery to the Gulf Coast.

Girling also hinted (in this Financial Post story) that plans to rail the portion of the Keystone XL being debated are being considered:
The Calgary-based company has ongoing dialogue with railways and oil companies about options to Keystone, and “if we need to bridge with rail, we will bridge,” Mr. Girling said in an interview. 
“I don’t think we would ever stop pressing the pipeline option, but there is a point in time at which we would consider a rail option,” he said.
I'm a big fan of this step. Moving past a complete focus on XL paradoxically improves the odds of getting approval (as discussed here).

Kinder Morgan submitted their much anticipated, and already controversial, plans to expand their TransMountain pipeline. This is a very preliminary step in a very long process, but it is a positive step.
The company said the next step will be for the NEB to establish a hearing schedule that corresponds to the federal government’s legislated 15-month period for review and decision. 
Canada's Minister of Natural Resources Joe Oliver said the safety of the public and the environment will be taken into account in the board's "thorough, science-based review" of the project. 
“Our government has been clear: we will only allow energy projects to proceed if they are found to be safe for Canadians after an independent, scientific environmental and regulatory review. That is why we are moving forward with our plans to further enhance marine and pipeline safety and to engage with First Nations on West Coast energy infrastructure," Oliver said Monday in a written statement. 
Once the NEB delivers its final report, the federal government will have 90 days to review the recommendations and make a final decision on the expansion.

And finally, the NEB has offered a conditional approval of Enbridge's Northern Gateway Pipeline that would move 525,000 bopd from Edmonton to Kitimat, BC, with a corresponding 20 inch pipeline running in the opposite direction. This is the second step down the same long road that Kinder has just started down:
The report — which contains 209 conditions for approval, including the development of a marine mammal protection plan, a caribou rehabilitation plan and a research program on the clean up of heavy oil — will now go to the federal cabinet, which has 180 days to render its final decision.

All in all we have some movement. For the past few months, I've been a bit pessimistic on our oil getting to market (perhaps thinking big pipeline projects had gone from p = 0.90 to p = 0.75) and probably undeservedly so. Now we have some action on these logical, common sense (economically) projects. XL is a no brainer. Getting more oil to the west coast is a no brainer goal, but the logistics are admittedly more complex (mountains, first nations groups, tanker traffic, etc.). Heck, even a pie in the sky idea like a reversal of the long forgotten Mackenzie Valley pipeline got me more hopeful.

Hopefully these are all positive steps to end off 2013 and a good way to kick off the new year. A more tangible positive would be having Obama sign off on the border crossing in the not so distant future.

With all of these pipeline projects progressing (and the development of the Oilsands less contingent on XL) the likelihood of that just went up.

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