Parallel Lines The Diluent Trail Across Canada – Part 7 Hardisty Diluent Requirements

Hardisty is the main export hub for Western Canadian crude travelling to market in Eastern Canada or the U.S. That role will expand when (and if) the TransCanada Keystone XL and Energy East pipeline projects are completed. With 3.5 MMb/d of mostly heavy crude passing through, you might expect Hardisty terminals to require significant volumes of diluent. But in fact only one outbound diluent pipeline serves Hardisty region gathering systems. Today we explain why Hardisty requires less diluent.

This series reviews infrastructure delivering increasing quantities of diluent to production locations in Western Canada. The first episode (see The Diluent Trail Across Canada – Introduction) provided an overview of current and expected demand for diluent range materials for use by oil producers in the Western Canadian Sedimentary Basin (WCSB). Total Canadian demand for diluent in 2014 is expected to average 380 Mb/d – meaning that with 160 Mb/d of local supply about 220 Mb/d will be imported – mostly from the U.S. By 2019 total Canadian diluent demand is expected to increase to 685 Mb/d and some of that will be supplied by imports from the U.S. Episode Two covered the Southern Lights and Cochin pipeline diluent routes from the U.S. to Western Canada that deliver the majority of those imported supplies today. In Episode 3 we looked at the diluent distribution network in the two Edmonton hubs of Sherwood Park and Fort Saskatchewan, operated by Enbridge and Keyera respectively. Diluent distributed through pipelines and storage in these two hubs is comingled and has to meet the Enbridge CRW specification. In Episode 4 we looked at plans by midstream pipeline company Pembina to build a Canadian Diluent hub at Fort Saskatchewan fed primarily by growing local supplies from their Western Canadian gathering and processing system. In Episode 5 we described expanding diluent pipelines operated by Plains Midstream Canada and Inter Pipeline. In Episode 6 we described planned diluent pipelines out of Fort Saskatchewan proposed by TransCanada and Enbridge as well as the recent expansion of the Devon/MEG Energy 50/50 joint venture Access pipeline. Now we turn our attention to the Hardisty hub - looking first at Husky Energy.

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Hardisty is a tiny town in east-central Alberta that sits at a crossroads connecting crude oil gathering systems in the Western Canadian Sedimentary Basin (WCSB) to mainline pipelines that ship the crude to Eastern Canada and the US. Because of all the incoming crude being staged and blended for onward transit to market, Hardisty is the largest oil storage hub in Canada with over 21 MMBbl of tank capacity owned by seven companies. We posted a blog covering storage at Hardisty a year ago (see Edmonton and Hardisty – Part 5). The main outbound export pipelines from Hardisty are: the 2.5 MMb/d Enbridge Mainline to Eastern Canada and the U.S. Midwest; the 590Mb/d TransCanada Keystone (original) to Steele City NB, Cushing, OK and Patoka, IL; the 280 Mb/d Spectra Express to Caspar, WY and Wood River, IL (via the Platte system); and the 129 Mb/d Inter Pipeline (IPL) Bow River to Montana (see white arrows in Figure #1). Two new TransCanada outbound pipelines from Hardisty will be added to this tally in the next 3 years if they are approved and built. These are the long awaited 830 Mb/d Keystone XL and the proposed 1.1 MMb/d Energy East to Eastern Canada (see What Becomes of the Empty Pipelines). These outgoing pipelines add up to a lot of crude oil leaving Hardisty a good portion of which is heavy oil that has to be blended with diluent to flow in pipelines. So in theory Hardisty requires significant diluent supplies to serve the hinterland of inbound gathering systems bringing oil into the hub from the Athabasca and Cold Lake deposits to the north and east. 

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