It seems almost nothing is going to stop Western Canada’s crude oil production growth. But getting those incremental barrels to refiners and exporters will require more pipeline takeaway capacity, including expansions to Enbridge’s Mainline and Express systems, which should keep barrels flowing to key markets in the U.S. and avoid a capacity crunch. In today’s RBN blog, we consider how our outlook for Canadian production over the next several years stacks up against takeaway capacity and what additions will be needed to keep pace.
Today, we celebrate Juneteenth, which honors the end of slavery in the U.S. In observance of today’s holiday, we’ve given our analysts a break and are revisiting our June 6 blog on Western Canada’s crude oil production growth, which also serves as a preview of our upcoming School of Energy Canada. If you didn’t read it then, this is your opportunity to see what you missed.
It took a few months of unpleasantries, but it seems the energy trading relationship between the U.S. and Canada has returned to its previous pattern of reliable flows of crude oil, natural gas, NGLs, and electricity across their long border. There were no serious disruptions during the drama that began in January and lasted into April as both countries and trading markets reacted to the changing tune, direction and magnitude of tariffs that were to be enacted by the Trump administration, especially on something as vital and basic as energy imports into the U.S.
After all the drama and gnashing of teeth, the Trump administration ultimately concluded that it would not impose any new tariffs on energy imports. With Canada providing a huge amount of energy (and energy security) to its southern neighbor, especially as its largest importer of crude oil at more than 4 MMb/d — far more than any other nation — it was the best possible outcome for both sides. The potential for unnecessary crude price discounting of Canadian production (see Everybody Hurts) and higher costs for U.S. consumers were avoided — at least for now.
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As we discussed about a month ago in Here, There and Everywhere, it was in the midst of the tariff chaos earlier this year that Calgary, AB-based Enbridge, one of the largest midstream companies in the world, introduced additional plans and details for the expansion of its liquids pipeline systems linking Canada and the U.S. for the export of crude oil and import of diluent, a vital ingredient for the transportation of bitumen from the oil sands of Alberta. With the company’s expectation that Western Canada’s crude oil production will be steadily pushed higher in the years ahead, led by the Alberta oil sands, more pipeline export capacity will be needed to move that crude to market, while partly using additional imported diluent.
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About the song
“You’ve Got a Friend in Me” was written by Randy Newman and appears as the first song on the Toy Story (Original Motion Picture Soundtrack) album released in November 1995, along with the animated film of the same name. The song has also appeared in all of the sequels: “Toy Story 2,” (1999); “Toy Story 3,” (2010); and “Toy Story 4,” (2019). It was released as a promotional single in April 1996. Originally recorded by Randy Newman and Lyle Lovett, the song has been covered by many artists, including Robert Goulet, George Jones with Kathy Mattea, and the Gipsy Kings. Personnel on the record were: Randy Newman (vocals, piano) and various orchestra studio musicians (orchestrations).
The album, Toy Story (Original Motion Picture Soundtrack), was recorded at Sony Pictures Studio, Conway Studios, and Ocean Way Recording in Los Angeles, with Chris Montan, Frank Wolf, Don Davis, Jim Flamberg and Randy Newman producing. Randy Newman wrote all of the songs in the movie. Released in November 1995, it went to number #94 on the Billboard 200 Albums chart.
Randy Newman is an American singer-songwriter, composer, arranger and pianist known for his Southern-accented satirical Americana songs and his various film and musical theater scores. Newman began his professional career at 17, writing songs for The Fleetwoods, Cilla Back, and Gene Pitney in the early 1960s. He made his debut as a solo artist in 1968 with the release of his first album on Warner Bros. Records, Randy Newman. He has released 11 studio albums, two live albums, five compilation albums, 23 soundtrack albums, and 12 singles. He has won two Academy Awards, three Emmys, and seven Grammy Awards. He is a member of the Rock and Roll Hall of Fame, the Songwriters Hall of Fame, and has a star on the Hollywood Walk of Fame (he loves LA!). Newman continues to write songs and compose film scores.
Comments
Hey RBN - really nice write-up as per usual! We've been analyzing when egress pressures could return to Canadian differentials as well and I think your numbers are missing the planned expansions to Trans Mountain capacity. We understand TMPL is moving forward with 40 kbd of additional capacity, which could be extended up to 75 kbd by 2027 through DRA. Then another 180 kbd is being considered by TMPL through added pumping capacity. Of course if an extra 200+ kbd of committed capacity is added, the Westridge docks appears to become a constraint and the dredging plans may be rendered ineffective due to silt from run-off which flows into the Burrand inlet each spring. Anyhow, just wanted to share our soundings from meeting with TMPL recently, big fan of RBN so figured i'd share incase helpful!
Regards,
Jeremy Irwin