A number of planned expansions to major pipelines in Canada are set to significantly boost the volume of oil that can be shipped out of Western Canada. The collective impact of these projects is akin to constructing a sizable new pipeline.
Enbridge, the largest pipeline operator in the country, is advancing four expansion initiatives within its pipeline network. The company recently announced its final investment decision on the initial phase, with a price tag of $1.4 billion US. This phase aims to enhance capacity by 150,000 barrels per day on its Mainline system and an additional 100,000 barrels per day on its Flanagan South pipeline, with an expected completion by 2027.
Colin Gruending, Enbridge’s president of liquids pipelines, highlighted that these expansions are aligned with the gradual growth in oil supply. These developments come at a time when Alberta is pursuing its own pipeline project, alongside discussions on reviving the Keystone XL pipeline.
Trans Mountain is also proposing two enhancements to its pipeline from Edmonton to a port near Vancouver. These improvements involve utilizing drag-reducing agents to increase oil transportation capacity and constructing robust pumping stations for enhanced oil flow.
The combined impact of these expansions is estimated to provide over one million barrels per day of additional shipping capacity, as per a report by TD Cowen. Currently, Western Canada produces around 5 million barrels of oil daily, with the country’s oil export capacity standing at approximately 5.2 million barrels per day.
Alberta Premier Danielle Smith recently hinted at a potential provincial government pipeline project to the West Coast, aiming to bolster export capacity and foster growth in the oil industry. The revival of the Keystone XL pipeline and other hypothetical scenarios are depicted as a “blue-sky” scenario by TD Cowen, given their uncertainties and lengthy development timelines if pursued.
As global oil production surpluses are anticipated, with demand growth expected to rise, the landscape for new pipeline projects remains dynamic. Enbridge is actively advising the Alberta government on potential pipeline ventures, emphasizing the need for thorough evaluation and industry demand considerations.
With ample new pipeline capacity on the horizon, the willingness of oil companies to commit to long-term contracts for these projects remains a key factor in their success.