Enbridge Mainline

The Enbridge Mainline, by far the largest transportation network for growing Western Canadian crude oil supplies to the U.S. Midwest, Gulf Coast and Eastern Canada, recently received regulatory approval for the tolls that it charges shippers for using the massive pipeline system. As we discuss in today’s RBN blog, the Canada Energy Regulator’s (CER) thumbs-up ensures another five years of shipping cost predictability and comes as the Canadian oil pipeline landscape is about to permanently change with the pending startup of the 590-Mb/d Trans Mountain Expansion Project (TMX). 

U.S. crude oil imported from Western Canada averaged almost 3.6 MMb/d in the first 10 months of 2020 and accounted for 60% of total imports over the period. That’s some growth! Ten years ago, Canada was sending less than 2 MMb/d south and contributing only 21% of total U.S, import volumes. Alberta oil sands producers are planning for more production and export growth through the 2020s, with most of the incremental volumes bound for Midwest and Gulf Coast refineries and export docks. If that happens — and there’s no certainty it will — more north-to-south pipeline capacity through the U.S. heartland will be needed. Today, we continue our series on the efforts to expand or reverse crude oil pipelines between the U.S./Canada border and the Gulf of Mexico.

The province of Alberta has lifted its cap on crude oil production, oil-sands producers are implementing plans to increase their output through the 2020s, and new pipeline capacity from Western Canada into the central U.S. is being added on the all-important Enbridge Mainline system. With those stars aligning, the next big push by midstream companies will be expanding their ability to move Canadian barrels south to the Cushing hub in Oklahoma, the Patoka hub in Illinois, and refineries and export docks along the Gulf Coast. As a group, these new and expanded lines — plus a major pipe reversal — will represent one of the biggest midstream build-outs in the U.S. of this coming decade. Today, we begin a blog series about these projects and what’s driving their development.

Enbridge’s long-running effort to revamp how it allocates space — and charges for service — on its 2.9-MMb/d Mainline crude oil pipeline system is about to enter a new and important phase. On July 15, the Calgary, AB-based midstream giant plans to initiate an open season for shippers interested in locking up long-term capacity on the Mainline, which serves as the primary conduit for heavy and light crude from Western Canada to U.S. crude hubs and refineries. If all goes well, shippers will know by late in the year how much space they will have on the system starting in mid-2021, assuming Enbridge’s plan is approved by regulators. This is a huge change. The Mainline isn’t just the largest crude pipeline system out of Western Canada, it’s also the only major line whose service is currently 100% “uncommitted” — that is, the Mainline has no capacity under long-term contracts with shippers. Today, we discuss the latest on the midstreamer’s Mainline tolling plan.

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.

After a year’s delay due to permit issues, Enbridge now expects the expanded and reversed 300 Mb/d Line 9B pipeline to Montreal will come online next month (November 2015). The pipeline is an important cog in Enbridge’s Eastern Access and Light Oil Market Access expansion projects and will supply mostly light crude to two refineries in Quebec. As we explain today, the payload will travel a winding route to get to Montreal.

Eastern Canadian refineries are importing record volumes of light US crude - 263 Mb/d in May 2014 according to the Energy Information Administration (EIA). By the end of 2014, pipeline reversals and expansions to the Enbridge network will increase the flow of light crude to eastern refineries from Western Canada and North Dakota. The result could be even more imports from the US. Today we continue our series reviewing the extent and impact of Enbridge projects to move crude east.

RBN expects total Canadian crude production to grow to more than 5 MMb/d by the end of 2019 – an increase of 1.4 MMb/d over 2013. Most of that new production will be heavy bitumen from Western Canada that will find its best market at US Gulf Coast refineries configured to process that type of crude. Trouble is pipeline capacity between the production regions in Alberta and the Gulf Coast is in short supply – a situation made worse by permit delays to the Keystone XL project.  A less high profile but just as critical set of projects, parts of which are about to come online expand existing Enbridge and Enterprise pipelines between Canada and Texas. Today we begin a two part series describing the impact of these new systems.

Hardisty is the largest oil storage hub in Canada with over 21 MMBbl of tank capacity owned by seven companies. The largest player Enbridge has more than 12 MMBbl of storage with the majority being leased to third parties including a sizeable chunk to investment bankers JP Morgan. Western Canadian Select (WCS) the benchmark Canadian heavy crude is blended at Husky’s Hardisty terminal. Today we detail these two companies’ operations at Hardisty.