Creative options for oil transport considered as pipeline delays continue

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Information that allowing points within the U.S. would delay Enbridge Inc.’s Line three substitute pipeline mission till the center of 2020 as a substitute of late this 12 months implies that yet one more enhance in oil export capability has been kicked down the street.

READ MORE: Enbridge Line three substitute doubtless received’t be in service till second half of 2020

With each the Trans Mountain enlargement and Keystone XL pipeline tasks in courtroom limbo, consideration is popping to various concepts to increase Canada’s potential to proceed to get its oil to market.

In a report back to Pure Assets Minister Amarjeet Sohi final month, the Nationwide Vitality Board stated present pipeline capability is absolutely utilized and crude-by-rail infrastructure is working at or close to capability.

But it surely additionally recognized potential long-term market entry options that might embody extra oilsands bitumen upgrading and reversing present import pipelines.

READ MORE: Rail automobiles for oil transport ‘not going to resolve the issue’ for Alberta: Scheer

Sadly, none of these concepts works as a significant short-term various to new pipelines — and so they face lots of the identical velocity bumps — says NEB chief economist Jean-Denis Charlebois.

“Basically, what this is able to require is regulatory approvals and important capital investments as a result of these issues can’t happen in a single day,” he stated in an interview.

“First the economics should be there … then these options must undergo a regulatory course of.”

A dearth of funding dollars for conventional drilling in Western Canada means there are additionally fewer dollars out there for growing inventive choices, stated Kevin Birn, a vice-president with IHS Vitality in Calgary.

“I feel you should have some creativity however for those who really need creativity, they’ve obtained to see a future for funding in Western Canada,” he stated.

Right here’s a better take a look at some pipeline various options.

The diluent dilemma

Uncooked bitumen at room temperature has the consistency of peanut butter. Beneath freezing, it’s as arduous as a hockey puck.

To make it circulation in a pipeline, producers combine as many as three barrels of sunshine oil “diluent” for each seven barrels of bitumen — if one can eradicate or scale back the diluent, it frees up room within the pipeline.

In January, the Alberta authorities introduced a $440-million mortgage assure to assist Worth Creation Inc. construct a $2-billion upgrader that might convert diluted bitumen into medium artificial crude and diesel, each able to flowing undiluted in a pipeline.

WATCH BELOW (Jan. 22, 2019): Alberta to partially backstop new $2-billion bitumen upgrader

The power is the primary in line for as much as $1 billion in provincial incentives for partial upgraders, but it surely isn’t anticipated to be working till a minimum of 2022.

A report ready for the province in 2017 instructed that a 100,000-barrel-per-day partial upgrading facility might add $10 to $15 of worth to every barrel of bitumen. The report listed 10 pre-commercial applied sciences which were examined or proposed for deployment in Alberta.

Any plan to cut back diluent should take into account the influence on U.S. prospects, who’ve configured their refineries to make use of diluted bitumen, stated Birn.

He added diluent will nonetheless be wanted to ship the bitumen from the sphere to the partial upgrader, which suggests diluent restoration models doubtless additionally will must be constructed.

New expertise

No diluent in any respect can be required with a brand new expertise to combine and coat bitumen with recycled plastic and kind it into strong pucks for transport in odd railcars or transport containers.

An oil firm affiliated with the tiny Coronary heart Lake First Nation in northern Alberta is constructing a $50-million pilot plant to check the “CanaPux” product developed by Canadian Nationwide Railway Co.

But it surely’s not identified when a industrial facility would comply with.

Pipeline effectivity

Lowering the demand for diluent in Canada might assist Enbridge resolve on the choice to transform its Southern Lights pipeline — used to import U.S. condensate diluent into Canada — right into a crude oil export pipeline with capability of about 150,000 bpd, presumably by 2023.

In the meantime, the operator of the largest oil export pipeline community in Canada is getting inventive because it appears at utilizing drag decreasing brokers contained in the pipe and redirecting some downstream U.S. injections to open up long-haul capability for Western Canada, together with low-cost pipeline and pumping station upgrades.

It thinks it might add one other 50,000 to 100,000 bpd of incremental export house by mid-year and is finding out a possible 450,000 bpd of throughput optimization initiatives.

Watch under (Feb. 19, 2019): Premier Rachel Notley has rolled out a multi-billion greenback plan to get extra Alberta oil onto practice automobiles and off to market. As provincial affairs reporter Tom Vernon explains, she’s assured the choice will give Alberta’s backside line a giant enhance.


Rail exports rose to a document of over 350,000 bpd in December earlier than falling in January and February after Alberta imposed manufacturing cuts to cut back storage and open up house on pipelines.

They’re on the rise once more as Alberta loosens its manufacturing quotas and Imperial Oil Ltd. restarts rail shipments it stopped in February.

Crude shipped by rail typically incorporates diluent however the NEB notes extra oil might be put in every automotive if the oil isn’t diluted — though that requires using automobiles that may be heated on the vacation spot dock to empty the bitumen.

In the meantime, Alberta’s NDP authorities is urgent forward with plans so as to add locomotives and railcars to maneuver 120,000 barrels per day of crude, beginning on the finish of the 12 months — though the opposition United Conservative Celebration has vowed to kill the order if it wins the provincial election this week.

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