Northern Gateway

Three major crude oil pipeline projects now under development would add nearly 1.8 MMb/d of much-needed takeaway capacity out of the Western Canadian Sedimentary Basin (WCSB), a region hit hard by pipeline constraints and widening price differentials. But each of the three projects — Kinder Morgan’s Trans Mountain Expansion (TMX), Enbridge’s Line 3 Replacement Project and TransCanada’s Keystone XL — continues to face regulatory challenges and it remains unclear how many of the projects will advance to construction and how soon the first of them might come online. It’s also possible that one or more may go the way of Northern Gateway and Energy East, two major pipeline projects that went belly-up after years of planning. Today, we continue our blog series on Western Canadian crude oil with a look at Keystone XL and its prospects.

This year (2013) Canadian regulators are expected to decide the fate of two West Coast crude oil pipeline projects. If one or both of these pipelines get the go-ahead then future expansion of Canadian production will be secure for a few more years and the export option to Asia will bring producers higher prices. The regulators face a single jeopardy – approve the pipelines or Canadian crude production expansion will decline. Producers face a double jeopardy if the pipelines are not built – lower production and lower prices. Today we discuss how critical the West Coast pipeline projects are to Canadian producers.

The pipelines transporting Western Canadian crude oil to US markets are full to overflowing. Space on the main lines is being rationed. As much as 250 Mb/d of new production is expected online during 2013. The price of Western Canadian Select heavy crude fell to nearly $40 under NYMEX WTI during the first week of January 2013. The pressure is on to build new takeaway capacity to Canada’s west coast. Today we look at the Trans Mountain Pipeline expansion project.