The future’s bright: Part one

There have been so many new developments in Canada’s oil and gas sector that it occasionally becomes difficult to keep track. Some recent highlights:The National Energy Board (NEB) expects oilsands production to increase from current levels of 1.9 million bpd to 5 million bpd by 2035. Recent announcements of new projects include Shell’s Jackpine mine expansion, Suncor Energy’s Fort Hills mine, and Shell’s Carmon Creek insitu project.

Thanks to the development of shale gas plays, the NEB expects Canada’s marketable natural gas production to rise. Most of the increase will be due to LNG exports to Asian markets. Explorers are targeting shale formations that are rich in natural gas liquids (NGLs). The NEB estimates that the Montney formation in northeast British Columbia holds over 14 billion bbls of marketable NGLs.

Oil pipelines

All of these plays need new, large capacity pipelines to access markets. TransCanada is partnering with Phoenix Energy to build the Cdn$ 3 billion Grand Rapids system to gather output in the oilsands region. Enbridge announced it would build the Woodland Pipeline extension to service Imperial’s Kearl Oilsands project. Westwards, Kinder Morgan is seeking to expand its Trans Mountain system to Vancouver from 300 000 bpd to 800 000 bpd. Enbridge was recently granted approval by the NEB to construct the Northern Gateway pipeline, which is designed to move up to 800 000 bpd to the deepwater port of Kitimat, British Columbia.

To the south, both Enbridge and TransCanada deliver over 2.6 million bpd of bitumen and sweet synthetic crude to the US. Recently, Enbridge received shipper support to replace all segments of Line 3, which runs from Alberta to Wisconsin.

To the east, both Enbridge and TransCanada are seeking to expand deliveries to Ontario, Quebec, the Maritimes and international destinations. Enbridge has been given approval by the NEB to reverse Line 9B, which delivers crude from Quebec to Sarnia, Ontario.

Faced with competition from US gas, TransCanada is looking to repurpose its mainline gas transmission system running from Alberta to Ontario, then to extend it with new-build. The 4500 km Energy East pipeline would deliver up to 1.1 million bpd from Alberta to the deepwater port of St. John, New Brunswick.

Gas pipelines

Thanks to the North American shale gas revolution, much of the pipeline infrastructure that formerly delivered gas from Canada to the US is now under utilised. But the new sources of shale gas in northeast British Columbia and northwest Alberta have an alternate outlet; LNG.

EnCana, Apache Canada and EOG Resources received approval to build the Cdn$ 5.6 billion Kitimat LNG project, capable of liquefying 1.4 billion ft3/d. Royal Dutch Shell, Korea Gas, Mitsubishi and China National Petroleum Corp are also contemplating the LNG Canada project, a Kitimat facility that would convert 1.8 billion ft3/d. BG Canada has proposed the Ridley Island LNG project. All in all, the NEB has approved over 14 billion ft3/d LNG capacity.

All of the LNG projects would need extensive pipeline new build. Spectra Energy has been contracted by BG Canada to construct an 850 km line. Gas for EnCana’s Kitimat LNG project will be delivered via the 36 in. dia. Pacific Trail Pipeline, stretching 463 km from northeast British Columbia. Shell’s LNG Canada project will receive gas from TransCanada’s proposed Coastal Gaslink.

Pembina pipelines has already spent Cdn$ 670 million to add 55 000 bpd of crude and condensate capacity to its Peace system in BC and northwest Alberta (raising total capacity to 167 000 bpd), and 53 000 bpd to the Northern NGL system (now handling 220 000 bpd). In late 2013, it announced that it had contracted binding commercial agreements to begin its Phase III expansion. The Phase III programme will see 240 km of new 24 in. dia. pipeline from northeast British Columbia to the Edmonton area, as well as additions to existing pipelines. Once completed in 2017, Pembina will have a total of 885 000 bpd capacity delivering crude, condensates and NGLs from the new Montney, Duvernay and Deep Basin plays in northeast British Columbia and northwest Alberta to tank farms in the Edmonton region.

Written by Gordon Cope and edited by Hannah Priestley-Eaton

Part 2 of the abridged version of this article can be accessed here. The full article can be found in the June 2014 issue of World Pipelines.

Read the article online at: https://www.worldpipelines.com/business-news/02062014/the_future%E2%80%99s_bright_part_one/