Crude oil production from the Western Canadian Sedimentary Basin continues to grow, but U.S. PADD 2 refiners are already taking nearly as much as they can. Growing production could move into Cushing, OK, and Patoka, IL, but will there be enough pipeline capacity to reach the Gulf Coast?
As crude oil production continues to grow in the Western Canadian Sedimentary Basin, more pipeline capacity will be needed. The 590-Mb/d Trans Mountain Expansion in 2024 temporarily provided a period of surplus capacity, but that is shrinking. Today, we go through all the projects in the works.
End markets for Canadian crude oil have evolved as production and export capacity have grown, especially in the past few years. Today, we dig into the data to see where Western Canadian Sedimentary Basin crude oil supply goes, how it gets there, and how those destination markets have evolved.
Crude oil supply from the Western Canadian Sedimentary Basin continues to grow. At times, it has exceeded the region’s outbound pipeline capacity. Today, we’ll take a close look at the periods of pipeline surplus and scarcity, and how they correlate with WCSB price discounts relative to U.S. price benchmarks.
With Canadian crude oil production continuing to grow, the industry and politicians are considering options to add pipeline export capacity out of Western Canada. In today’s RBN blog, the second of a series, we review the major pipeline projects that have expanded markets for Western Canadian Sedimentary Basin crude oil since 2010, and how those expansions lined up with supply growth.
The immense Montney Formation in Western Canada is almost equally divided between the two provinces of Alberta and British Columbia. However, on either side of the provincial border there are stark differences in the number of wells drilled, well length, well productivity, and natural gas production. All these differences have resulted in Alberta being the much smaller player in the Montney gas story, with production from its side of the formation only helping to hold the line on Alberta’s total gas output in the past few years. Today, we continue our Montney analysis by looking at gas well trends on the Alberta side of this prolific formation.
Sure, there was at least some hope among Keystone XL’s supporters that President Biden might back away from his promise to kill the much-maligned crude oil pipeline project. After all, KXL developer TC Energy had done all it could to make the 1,210-mile project more palatable to the incoming administration by making Canadian First Nation groups partners in the project, reaching a favorable labor agreement with the four U.S. unions that would build the pipeline, and, most recently, committing to invest in renewable energy to power KXL’s pumps and other equipment. But it wasn’t enough, and now, with Biden’s decision to revoke the project’s Presidential Permit, it appears that the Alberta-to-Nebraska pipeline is all but dead, and that Western Canada will need to get by without its 830 Mb/d of southbound capacity. The looming question now is, what does that mean for Alberta’s producers — particularly those that have signed up for more than 500 Mb/d of space on KXL? Today, we discuss what’s ahead.
Limited natural gas export options and persistently weak gas prices are not new phenomena in Western Canada. But market conditions in the past couple of years have become particularly untenable. Western Canadian Sedimentary Basin (WCSB) gas supply has ratcheted higher and shows signs of further growth, even as its share of export markets has been shrinking with the rise of U.S. shale gas. In-region oversupply conditions have worsened, creating transportation constraints further and further upstream in the WCSB, and prices at the regional benchmark AECO hub have seen historical lows as a result. To deal with this, and perhaps provide a long-term solution to weak natural gas prices, pipeline egress will have to expand again after a decade of decline and stagnation. New takeaway capacity is now starting to be developed. The question is, will it be enough? Today, we discuss highlights from our new Drill Down Report, which assesses the expanding gas pipeline options out of Western Canada, including when, where and how much takeaway capacity will be developed.
The Western Canadian natural gas market remains a challenging environment from every angle: rising supplies, lack of available pipeline export capacity, and demand that can’t seem to rise fast enough. This has resulted in a price environment which, of late, has become the weakest in North America. The long-term solution to anemic prices and future supply growth is to increase pipeline export capacity from the region and ensure that demand continues to grow. We conclude this series today with a look at how forecasted supply and demand growth will stack up against planned export pipeline capacity additions to determine if the embattled region’s prospects can turn around in the next few years.
The options for moving Western Canada’s natural gas supply out of the region are limited. This situation has become more acute in the past few years with the upswing in associated gas production from specific areas within the sprawling region, meaning that not all the takeaway pipelines are created equal in terms of being able to move this incremental gas supply to downstream markets. One pipeline system — TC Energy’s mammoth Nova Gas Transmission Ltd. (NGTL) network — is ideally located to help out, given that big parts of it run through the fastest-growing production areas. But it’s been running full and is increasingly constrained. Will the planned expansions to the NGTL system be enough? Today, we continue our series on the Western Canadian natural gas market with a look at TC Energy’s NGTL network, the largest and most geographically advantaged of the pipeline systems in the region.
