Several oil-sands expansion projects committed to when crude oil prices were double what they are today are finally coming online, and midstream companies active in Alberta are building new crude/diluent pipelines and storage capacity to keep pace. New storage caverns for natural gas liquids are also in the works, giving a much-needed boost to Canada’s Energy Province. Today we conclude our series on midstream infrastructure under development in or near Western Canada’s oil sands region that move and store hydrocarbon liquids.
Alberta––sometimes called “the Texas of the North”––has experienced as many ups and downs in its oil patch as the Lone Star State, and lately, with crude prices hovering near $50/bbl and the Fort McMurray, AB area still rebuilding from the wildfires of May 2016 (see Back in the High Life and Over the Hills and Far Away), it’s fair to say that times have been better. The good news is that oil prices have been inching up; a number of the projects committed to a few years ago to boost oil sands production are approaching commercial operation; and the expected output increases are spurring the development of new midstream infrastructure. In Part 1 of this series, we discussed the challenges that oil sands producers have faced (low crude prices, the wildfires, the extra costs associated with moving bitumen and heavy oil to market, etc.), as well as the fact that Alberta producers decided a few years ago (when Western Canadian Select – WCS - crude prices topped $70 to $90/bbl) to undertake a combined 850 Mb/d or so of oil sands capacity-expansion projects that would come online in the 2015-19 period. Those projects have had a domino effect, resulting in the need for a lot more diluent––either in the form of natural gasoline (a natural gas liquid, or NGL) or field condensate (superlight crude oil)––to decrease the viscosity of bitumen and heavy oil and enable them to flow through pipelines. In Part 2, we discussed how the need for more diluent has encouraged natural gas producers in Alberta to focus on “wet” gas and field condensate production in the province’s Montney and Duvernay plays, and how that shift has spurred the development of new natural gas processing capacity (to extract NGLs and remove impurities from raw gas) and fractionation capacity (to separate mixed NGLs into purity products like ethane, propane, butane and natural gasoline––the leading diluent material). Taken together and if they all happen, the Alberta projects we discussed would add 163 Mb/d of fractionation capacity and 800 MMcf/d of natural gas processing capacity; projects just over the border in British Columbia would add another 1 Bcf/d of gas processing capacity.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
This time it’s all about new pipelines and storage being built within Alberta’s borders. The aims of these projects (like a lot of midstream work) are a combination of catch-up and in-anticipation-of––that is, the new infrastructure will address current shortfalls in pipeline and storage capacity and provide the incremental midstream capacity that the new oil sands (and other) production will require when the expansion projects we discussed in parts 1 and 2 come online. We begin with Alberta pipeline projects, the longest of which is the 286-mile Grand Rapids Pipeline (blue dashed line in Figure 1), which will actually consist of two parallel pipelines flowing in opposite directions between Edmonton, AB and an oil sands production area northwest of Fort McMurray.
Join Backstage Pass to Read Full Article
About the song
“Things Goin’ On” was a song on Southern rock group Lynyrd Skynyrd’s self-titled first album, whose phonetically helpful subtitle was (pronounced 'Lĕh-'nérd 'Skin-'nérd). The 1973 album also featured some of the band’s best-known songs, including “Free Bird”, “Simple Man” and “Tuesday’s Gone”.
