Friday, February 02, 2007
Is the return of the Gateway oil pipeline in the cards?
While the Gateway oil pipeline is officially considered to be a project to be considered at a later date, there are some rumblings that the later date may soon be upon us.
Enbridge has been giving consideration to construction of a dual pipeline stretching some 1,400 kilometres that will move crude oil from Alberta to a terminal located at Kitimat. Plans to begin development were pushed back to somewhere between 2012 and 2014, but if they can find commitments for their product then there’s a chance that the timeline can be moved forward.
Construction of the pipeline would provide another economic boost to the northwest part of the province, but there are still a number of regulatory procedures to go through before the project jumps to life.
The Daily News provided some background on the sudden interest in the project in its Thursday paper.
ENBRIDGE PIPELINE COULD BE RETURNED TO THE FAST TRACK
By Leanne Ritchie
The Daily News (Prince Rupert)
Thursday, February 1, 2007
Page one
Enbridge may have put the Gateway oil pipeline on the back-burner for now, but clearly the pot is still warm.
During yesterday’s fourth quarter conference call, Pat Daniel, Enbridge CEO, said the company still believes there is a definite need for the Gateway line to reach other markets outside the U. S. “to receive full value for their crude,” And if they can get a 350,000 barrel-a-day order, the timeline for the project could get pushed back up.
“As you know, we have slowed the pace in response to customer requests to accelerate and prioritize expansion in an easterly direction,” he said.
“However, I would remind you that this can change very quickly if Asian refineries are able to conclude supply agreements.”
Enbridge is looking at building a 1,400 kilometre dual pipeline that will move crude oil from Alberta to a Kitimat terminal on the West Coast and import condensate, an oil thinner, in the other direction.
The idea is that the pipeline would allow Canadian producers to access both U. S. West Coast and Asian markets and the company has already spent $80 million on the project.
However, last November, the company pushed the timeline back for the Gateway project by four years – to 2012 to 2014 0 in response to increased refinery capacity in the U. S. Midwest.
Daniel said yesterday they need a 350,000 barrel-a-day commitment to proceed with the Gateway project. It would carry 400,000 barrels a day.
“We still see a 400,000 barrel-a-day threshold as being necessary in order to make this go and feel that this is the level that we are really going to need to get the pricing effect that we want,” he said.
In the meantime, Enbridge has given a priority to its plans for the Alberta Clipper project in order to open more access to U. S. markets for Canadian producers.
It made the decision in response to announcements by its customers – BP and ConocoPhillips-Encana – to expand oil refining capacity in the U. S. Midwest.
“It is particularly gratifying to see some of our oil pipeline projects moving forward to construction phase,” said Daniel.
“We are now focused on execution and it’s a good feeling to have the spade in the ground on some of those.”
By 2009, Enbridge’s U. S. southern access expansion will add 400,000 barrel-a-day capacity from Alberta to Chicago and the Alberta Clipper project will result in ultimate capability of 1.2 million barrels a day to Chicago.
“With over $8 billion of liquids pipeline projects moving forward, we’ll nearly double the company’s net investment… as the company now embarks on one of the most intense capital programs in its history,” said Daniel. And a slightly lower fourth quarter didn’t prevent Enbridge Inc. from posting a nearly 10 per cent increase in annual earnings to $615.4 million as the big pipeline company prepares to spend $2 billion this year alone on the new oil projects.
Labels: Enbridge, Kitimat Port pipeline
