Enbridge expect their Line 9 reversal to be complete in October 2014. By the end of 2014 this pipeline will deliver 300 Mb/d of mainly light crude to two refineries in Quebec. But the Line 9 reversal will likely not have capacity to ship any crude for export – either from Canada’s East Coast or via the Portland-Montreal pipeline to Maine. Significant crude deliveries east of Quebec will have to wait for TransCanada’s Energy East pipeline in 2018. Today we explain why in the final episode of our series on feeding crude to eastern Canadian refineries.
In Episode One of this series, we reviewed the 9 refineries in eastern Canada with combined capacity of 1.3 MMb/d. These refineries mostly process light crude that until recently has come from offshore Atlantic seaboard production and imports, but they are processing growing volumes of US shale oil today. Extensive upgrades, reversals and expansions to the Enbridge network have begun to change the dynamics of crude supply to these refineries. In Episode Two we began a description of Enbridge expansion plans with the Eastern Access project. In Episode Three we finished up the Eastern Access project plans and started on Enbridge’s Light Oil Markets Access (LOMA) projects with the Sandpiper pipeline. In Episode Four we covered the expansion of the Southern Access line to deliver Sandpiper crude to Flanagan and its extension to Patoka. In Episode Five we covered how new flows on Line 9 will feed refineries in Ontario as well as Warren, PA.
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RBN Energy’s second Fundamentals Webcast for Backstage Pass subscribers is scheduled for today, Thursday, September 4th at 2:30pm central time. In this session, Rusty Braziel will review condensate exports, Northeast natgas basis and ethane supply/demand. More information here.
The Enbridge Line 9B reversal brings 300 Mb/d of crude from Griffith, IN to Montreal. There the 137 Mb/d Suncor refinery will consume up to 130 Mb/d. Suncor expect to ship their own equity synthetic crude oil from Alberta to Sarnia via Line 5 and then onto Line 9. Suncor has already built 36 Mb/d of rail unload capacity at their Montreal refinery and can use that capacity to supplement pipeline supplies. Suncor can also still receive crude shipments via the St Lawrence River as we discussed in Episode 1 but this route is constrained in the winter by icy conditions. And as we shall see in a minute, Suncor could also continue to receive crude supplies from the Portland-Montreal pipeline (PMPL).
The second refinery in Quebec province is the 265 Mb/d Valero Jean Gaulin refinery located across the St Lawrence River from Quebec City at Lévis. Valero is also expecting to use crude supplied via Line 9 to feed the Lévis refinery but their logistics will be considerably more complicated. That’s because Lévis is 155 miles up the St Lawrence River from Montreal, so Valero has to ship crude there from their existing Montreal East storage terminal by tanker. To that end, the company has purchased two 500 MMBbl capacity Panamax class tankers to shuttle crude back and forth from Montreal to Lévis. The two vessels will be limited to moving 350 MBbl depending on St. Lawrence water levels and both have Ice Class 1A certification, allowing them to navigate the river during the winter. Valero anticipate three vessel trips per week between Montreal and Lévis.
If Suncor is using 130 Mb/d of capacity on Line 9B, in theory that leaves up to 170 Mb/d that Valero can ship to Lévis – 95Mb/d less than full refinery capacity (265 Mb/d). So they need to source other crude supplies beyond what Line 9B can provide. Valero already have in place a 60 Mb/d crude by rail unloading terminal at Jean Gaulin that can fill most of that supply gap. They can also continue to receive waterborne imported crude supplies at their Lévis deepwater dock. Valero has been using that route to bring cargoes up the East Coast from the US Gulf on foreign flagged vessels (such as Light Louisiana Sweet or Eagle Ford crude). Valero could also source crude from the PMPL pipeline into their East Montreal storage terminal and ship that up to Lévis along with Line 9 crude as just described.
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