The recently mandated reduction in Alberta crude oil production has helped to ease takeaway constraints out of Western Canada, but only temporarily. Worse yet, it’s unclear how long it will take to add new takeaway capacity from challenged projects like the Trans Mountain Expansion Project or Keystone XL. In the midst of all this trouble and uncertainty, Enbridge is pursuing a potentially controversial plan to revamp how it allocates space — and charges for service — on its 2.8-MMb/d Mainline system, the primary conduit for heavy and light crudes from Western Canada to U.S. crude hubs and refineries. Today, we begin a series on the company’s push to shift to a system that would allocate most of the space on its multi-pipe Mainline system to shippers that sign long-term contracts.
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.
It’s been an interesting few years for the Western Canadian crude oil market. Since 2010, Western Canadian Sedimentary Basin (WCSB) production has increased from ~3 MMb/d to ~5 MMb/d, with virtually all of the incremental output available for export. Pipeline capacity from the WCSB to the U.S. has been rising too — from ~2.7 MMb/d nine years ago to ~4 MMb/d now — but not quickly enough to keep up with production gains. In 2018, with export volumes meeting and even exceeding available pipeline takeaway, there was a resurgence in crude-by-rail (CBR) volumes and a widening in the WCS-WTI spread. As we said a couple of months ago in Money Changes Everything, that price differential grew to nearly $40/bbl in November (2018), prompting the provincial government of Alberta — the center of WCSB production, including the oil sands — to institute a mandatory production cut (starting in January 2019) in an effort to bring Alberta output more in line with available takeaway capacity. The governmental intervention, while criticized for being just that, seemed to do the trick; the price of WCS shot up, the WCS-WTI spread narrowed dramatically, and by late January, the province had eased planned production curtailments for February and March.
That’s not to say that the troubles facing Western Canadian producers are over — far from it. Figure 1 shows that the volume of WCSB crude available for export (black line) has been bouncing up against — and sometimes even exceeding — the available pipeline-export capacity provided by the six major pipelines out of Western Canada, including the Enbridge Mainline (light gray layer), TransCanada’s Keystone (medium blue layer), and the Canadian government’s Trans Mountain Pipeline (purchased from Kinder Morgan last year; dark blue layer). This very high utilization of export pipelines suggests that super-wide WCS-WTI spreads could return at any time, particularly when province-imposed production caps are lifted and new oil-sands projects, such as Canadian Natural Resources’ 40-Mb/d Kirby North project, start coming online later this year and in 2020.
Join Backstage Pass to Read Full Article
About the song
"Maybe It's Time," written by Jason Isbell and sung by Bradley Cooper, is the seventh cut from the 2018 soundtrack of the hit movie “A Star is Born.” The song was recorded at The Village West in Los Angeles, and mixed at Electric Lady Studios in New York City. It was produced by Bradley Cooper, Benjamin Rice and Lady Gaga. Bradley Cooper had asked record producer Dave Cobb to help him craft and find songs for the movie’s soundtrack. Cobb was working with Jason Isbell in the studio and asked him to write a song to submit for Cooper. When Cobb flew to L.A. and met with Cooper and Lady Gaga for a writing session, he played them Isbell's "Maybe It's Time." They both felt that it fit Cooper's movie character of Jackson “Jack" Maine perfectly, so it became the staple song of the movie. Cooper had been working with musician Lukas Nelson (Willie Nelson's son) for about a year before production started on the A Star is Born soundtrack album to hone his guitar and vocal skills. Lukas Nelson and his band, "Promise of The Real," appear in the movie as Jack Maine's backup band. "Maybe It's Time" went to #93 on the Billboard Hot 100 chart.
The soundtrack album of “A Star Is Born” features the movie's stars, Bradley Cooper and Lady Gaga. The music on the LP contains elements of blues, rock, country and pop. It was released in October 2018, and went to #3 on the Billboard Soundtrack Albums chart and #37 on the Billboard Top 200 Albums charts.
Bradley Cooper is an American actor, director, and producer. He has appeared in a long list of movies, with some of the better-known including “The Hangover” and its two sequels; “Silver Linings Playbook”; and “American Sniper.” He has received four Oscar nominations for his acting –– three for leading roles (including “A Star Is Born”) and once in a supporting role. He also has been nominated for Oscars for co-producing “A Star Is Born” and for helping to write the movie’s screenplay.
