Regional pipelines advance as major export projects stall
TCPL mainline attracts shipper interest; Line 9 reversal gets regulatory nod
TransCanada Corp. said today that it will spend $660 million to build a 90-kilometer link between the planned Fort Hills mine and Voyageur upgrader, a joint venture between Suncor Energy Inc., Teck Resources Ltd. and the Canadian arm of Total SA.
Neither the mine nor the upgrader has been sanctioned, and Suncor chief executive officer Steve Williams said last month that the company would not be bound by strict timelines, raising the prospect of delays. Yet the short-haul pipe proposed by TransCanada is one of several that have managed to avoid the sort of stiff resistance and increased scrutiny from regulators encountered by major expansions.
TransCanada, which last week received final approval to build the southern leg of its Keystone XL expansion, sees “very significant opportunities” to expand its pipeline network in Alberta, Alex Pourbaix, the company’s president of energy and oil pipelines, said on an earnings call last week.
In Alberta, the company has $340 million of new projects in the queue, it said in a second-quarter presentation to investors. The growth potential is set against ongoing efforts to convert portions of TransCanada’s cross-country mainline from natural gas to oil service. “We’re getting a lot of inbound interest from potential shippers on the project,” Pourbaix told analysts, noting it could be configured to carry between 400,000 and 900,000 barrels of oil per day.
Much of the pipe is already in the ground, Pourbaix added – a “significant advantage,” he said, and one that was validated in a separate decision made last week by Canada’s National Energy Board.
On Friday, Enbridge Inc. received regulatory approval to reverse the flow on a 194-kilometer stretch of pipe between Sarnia and Westover in southwest Ontario, opening up a new market for western Canadian producers facing volatile price discounts in the American Midwest.
In its approval, the board said that “making use of existing underutilized pipeline capacity, if this can be achieved without significant adverse impacts, is a sound idea.”
Elsewhere, Calgary-based Inter Pipeline Fund LP, which already gathers 39 per cent of Canadian oil sands production, said yesterday that it will spend $2.1 billion to build 840 kilometers of new pipe and seven new pump stations to service bitumen projects operated by Cenovus Energy Inc. and ConocoPhillips.
The regional expansion was warmly received. Inter shares climbed this morning, and CIBC World Markets analyst Paul Lechem raised his price target on the company to $24, up from $22 previously.