Production from Alberta’s oilsands is set to increase by 50% to about 3.3million brl/d a day over the next 10 years, and the Canadian Association of Petroleum Producers estimates at least 600,000brl/d of new pipeline capacity will be needed. Anticipating new demand, Canada’s largest pipeline companies are now competing with various plans to build multibillion-dollar pipelines heading both east and west from Alberta.
The CAPP-sponsored report suggests the most attractive new opportunities for Canadian crude are refineries in cities including San Francisco and LA, as well as those on the US Gulf Coast. “Probably the most important reason right now is that refineries in that area have been using a medium-grade crude oil from Alaska,” CAPP vice-president Greg Stringham said. “And Alaskan production is on the decline because of the shift over to natural gas. If you take our light upgraded synthetic crude oil from Canada and blend it half-and-half with our Synbit (heavy oil or synthetic bitumen), it looks in characteristics very similar to the medium-grade the Californian refineries are already processing. It’s just a natural fit,” he said.
Recent talk has focused on getting oilsands’ crude to China and SE Asia. “China, Korea, Japan: from a consumption standpoint, that’s a very big, growing market. Up to this point in time, if you look by sea, we’re only about 1,100km from that coast, whereas guys coming from Saudi Arabia have to go over 9,000km. And coming from Mexico and South America, it’s over 13,000km. But currently, they process light oil and very little heavy and medium oil. The question is: will it make sense for them - if there was a pipeline to the west - to be able to take that crude from Canada,” Greg Stringham continued.
Canada’s largest oil shipper, Enbridge Ltd, wants to build a $2.5-billion line called Gateway that would take 400,000brl/d of oilsands’ crude across the Rockies to the northern BC coast. It is expecting to get a memorandum of understanding from at least one major Chinese oil company soon, and firm commitments from producers by summer.
Story courtesy Global Pipeline Monthly - http://www.gasandoil.com/gpm.
