The government of Alberta is seeking to increase Canadian pipeline capacity to help it meet its goal of doubling crude oil production and boosting exports to the U.S.
The province this week signed a letter of intent with pipeline operator Enbridge to "evaluate future egress, transport, storage, terminalling and market access opportunities" for oil and natural gas produced in Alberta.
The group, which also includes the Alberta Petroleum Marketing Commission, will examine opportunities for shared investment in expanding pipeline capacity and new pipeline opportunities across Enbridge's entire network in Canada and the U.S., Alberta Premier Danielle Smith said on Monday. The group also will focus on streamlining regulations and permitting approval and encouraging similar efforts nationally, Smith said.
That includes working with the Canadian Energy Regulator to expedite capacity expansion and permitting and approvals for oil and natural gas projects.
She said the province was also in talks with other Canadian pipeline companies about similar efforts.
To support pipeline development, the province could use barrels it receives in lieu of royalties from producers to help fill the extra capacity, Smith said. She added that the province is positioning itself to take advantage of "impending regulatory reform" expected in the U.S. under President-elect Donald Trump.
"Increasingly, Alberta's ability to move more oil and gas will encourage producers to increase production and start new capital projects in Alberta," she said. Alberta now exports about 4.3 million b/d of heavy crude to the U.S., with much of that oil flowing through pipelines to refineries in the Midwest.
Production in the region has long been hampered by transportation bottlenecks, with producers struggling to bring crude to market and prices trading at a steep discount to U.S. benchmark West Texas Intermediate crude. The situation became so bad in 2018, when Western Canadian Select crude was trading at a $52/bbl discount to WTI, that provincial officials ordered a cap on production and invested in rail cars to help move product out of the region.
Those bottlenecks have eased significantly, particularly with the May 2024 opening of the Trans Mountain Pipeline expansion. That project nearly tripled capacity on the line to 890,000 b/d and provided Canadian producers expanded access to Pacific Coast export terminals. Western Canadian select, however, remains priced at more than $12/bbl below WTI.
Enbridge officials said the company in November held discussions with customers about the possibility of expanding capacity on its Mainline Pipeline system.
The 8,600-mile network carries more than 3 million b/d of light, medium and heavy oil from Alberta to eastern Canada and U.S. Midwest refiners.
Canadian crude oil production reached a record high of 144.99 million bbl in August, according to Statistics Canada data. Smith on Monday said producers in he western Canadian oil sands region realized organic growth of more than 7% over the last year.
Canadian production is expected to continue to climb in the coming years, with the International Energy Agency forecasting the country's crude production will increase nearly 9% by 2030.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
01-07-25 1603ET