Executives at Canada’s largest integrated oil and gas producers on July 10 downplayed the severity of transportation bottlenecks to move oil in the near term, citing existing pipeline commitments and refining capabilities.
Canadian producers have faced steep discounts for western Canadian heavy crude this year due to bottlenecks, while new pipeline projects have dealt with delays and protests from environmental groups.
Still, executives at Husky Energy Inc. and Suncor Energy Inc. (NYSE: SU) said their existing pipeline commitments would help overcome constraints in the short-term.
“Right now, 100% of our production, including all of the production from Fort Hills [Alberta], we have pipeline access to get to markets,” Mark Little, Suncor’s COO, said.
Husky has excess oil pipeline capacity to the U.S. and has enough capacity locked in to ship crude until about 2021, CEO Rob Peabody said, speaking on the sidelines of the TD Securities Calgary Energy Conference.
The company, which aims to grow production by about 5% annually over the next five years, has about 75,000 bbl/d committed on the existing Keystone pipeline and also has space on Enbridge Inc.’s (NYSE: ENB) Mainline crude pipeline system, Peabody said.
Most executives also expressed optimism over the completion of three main projects that are seen as crucial for Canadian producers to transport oil to the U.S. and Canada's western port: Line 3 replacement, Trans Mountain, and Keystone XL.
A Minnesota regulator late last month approved a certificate of need for Enbridge Inc. to rebuild its Line 3 oil pipeline, angering environmentalists.
“We’re definitely seeing progress. The innate logic of replacing a pipeline that needs to be replaced is finally being seen by courts,” Peabody said, referring to Line 3.
The Keystone XL pipeline project has been a lightning rod of controversy for a decade, hotly contested by environmentalists even though Canadian oil producers say it is desperately needed.
On the Trans Mountain pipeline, Peabody was optimistic the line will be built.
“Every time I see the prime minister, he assures me it's going to be built, so I believe that it will happen,” he said.
To be sure, some companies are more cautious, maximizing the use of every barrel.
Imperial Oil Ltd. is boosting its refineries' capabilities to handle more heavy oil, CEO Richard Kruger said.
“The whole objective is to minimize the amount of barrels that are exposed to Alberta and the price discounts,” Kruger said.
Cenovus Energy Inc. (NYSE: CVE) is awaiting more clarity on market access before it restarts construction on two deferred projects that will have a combined starting capacity of 75,000 bbl/d, said Cenovus Executive Vice President Al Reid.
Longer term, the companies stressed the need for more infrastructure to plan and invest in projects.
Recommended Reading
TC Energy's Keystone Oil Pipeline Offline Due to Operational Issues, Sources Say
2024-03-07 - TC Energy's Keystone oil pipeline is offline due to operational issues, cutting off a major conduit of Canadian oil to the U.S.
Pembina Pipeline Enters Ethane-Supply Agreement, Slow Walks LNG Project
2024-02-26 - Canadian midstream company Pembina Pipeline also said it would hold off on new LNG terminal decision in a fourth quarter earnings call.
TC Energy’s Keystone Back Online After Temporary Service Halt
2024-03-10 - As Canada’s pipeline network runs full, producers are anxious for the Trans Mountain Expansion to come online.
Enbridge Announces $500MM Investment in Gulf Coast Facilities
2024-03-06 - Enbridge’s 2024 budget will go primarily towards crude export and storage, advancing plans that see continued growth in power generated by natural gas.
Enterprise Gains Deepwater Port License for SPOT Offshore Texas
2024-04-09 - Enterprise Products Partners’ Sea Port Oil Terminal is located approximately 30 nautical miles off Brazoria County, Texas, in 115 ft of water and is capable of loading 2 MMbbl/d of crude oil.