Posted on 04/27/2008 4:56:11 PM PDT by Tolerance Sucks Rocks
EDMONTON - TransCanada Corp. alone plans to ship more than one million barrels a day of oilsands production to the United States with an expanded pipeline construction program unveiled today.
The Alberta oil and gas delivery mainstay added a second leg to its new Keystone export service that would more than double the system's capacity and extend it to the Texas coast of the Gulf of Mexico.
TransCanada president Hal Kvisle said the added route is a companion instead of competition for projects underway by Enbridge Inc., which is also advancing more than one million barrels daily in new oilsands export routes.
"It's not either or," Kvisle said after TransCanada pipeline chief Russ Girling reminded a conference call for financial analysts and media that the oilsands rush spells strong Alberta production growth until at least 2020.
The new project was disclosed as TransCanada starts building the first Keystone leg, a $5.2-billion line to deliver about 600,000 barrels daily to the Cushing oil trading hub in Oklahoma. Deliveries begin in late 2009 or early 2010.
Construction is underway in the U.S. Work is scheduled to begin soon in Canada after the firm finishes spring hearings on route details before the National Energy Board for landowners along the right-of-way in southern Alberta, Saskatchewan and Manitoba.
The NEB approved Keystone's first leg over heated protests by labour unions and Alberta opposition parties during the winter provincial election.
Critics predicted the project will export 18,000 jobs in resource processing to new or expanded bitumen upgrader plants in the U.S. Alberta Conservatives made no move to oppose Keystone at the NEB despite a declared goal of upgrading bitumen into premium light oil and refined products in the province.
Separate federal approval will eventually be sought for the second and bigger Keystone leg.
The added export service is being designed with larger pipe capable of flowing 750,000 barrels daily on a direct route to refineries clustered east of Houston in the Port Arthur area.
Costs are forecast to be 20-30 per cent higher than for the first Keystone leg, or about $6.2 billion to $6.8 billion. A target date for deliveries will be set following industry discussions this spring and summer.
Shipping tolls are projected to exceed $6 a barrel, making costs of sending oilsands output to southern Texas about six times higher than the freight to traditional Alberta outlets in Ontario and the Chicago region.
But TransCanada has predicted even the increased delivery expense will only be a fraction of price gains that Alberta exports stand to gain by going to one of the world's biggest oil trading areas.
Texas and Louisiana refineries buy about 7.7 million barrels a day from Mexico, Venezuela and the Middle East. Latin American output is shrinking due to natural depletion of aging wells and disputes with industry over resource ownership, royalties and taxes.
Southern U.S. refineries import heavy oil akin to Alberta bitumen. Their price discounts are only about half the penalties - as much as 50 per cent off the world benchmark grades of light oil, Brent and West Texas Intermediate - charged against low quality crude in the Chicago region, TransCanada has estimated.
At current international prices Alberta bitumen that reaches the Gulf of Mexico stands to gain $40 to $60 a barrel. Provincial royalties would also increase because their rates rise when prices go up.
Fine with me.
But I would like to see two other pipeline policies.
First, pipe capacity to enable eastern Canada to stop importing oil from overseas.
Second, trans mountain pipe capacity and a tanker port like Karg Island sufficient to enable Canada to materially increase exports oil and gas by sea.
The first so that the petrol that I burn in my car would be produced from Alberta crude instead of overseas crude.
The second as a hedge so that we can divert our exports to the Pacific Rim in the event that the Democrats win in November and carry out their plan to uniaterally "renegotiate" NAFTA.
A unilateral "renegotiation" is just a euphamism for abrogating it. This would discharge Canada from performance of it and free us to sell our oil and gas to the highest bidder without regard to the constraints contained in NAFTA.
Not much happened.
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