Enbridge Canadian oil
Dan Reed

Canadian Company Bypassing Roadblock to Heavy Crude Imports

The Obama Administration may have effectively stalled – for now – the Keystone Pipeline, but Toronto-based pipeline and distribution giant Enbridge is moving to demonstrate that Washington cannot entirely block the flow of heavy Canadian Tar Sands crude in the United States.

 Enbridge Will Use Existing Pipeline to Transfer Crude

Enbridge said in late August that it will bypass the need for U.S. government approval by shifting the movement of crude from the oil sands region north of Edmonton into an existing cross-border pipeline for a short journey of less than 20 miles into the United States.

Enbridge’s Alberta Clipper line, launched in 2008, like the Keystone project being pushed by competitor TransCanada, is awaiting formal approval from the U.S. State Department to move heavy Canadian Tar Sands crude across the border. But Enbridge now plans to use an easy work-around to move that heavy crude across the border.

Tar Sands oil will flow southeast from Edmonton through the Clipper line to a point about 1.5 miles north of the Minnesota border. At that point Enbridge plans to build a three mile link between the Clipper and its existing Line 3. From that point, the Tar Sands crude will move 16 miles into the United States, where it will be transferred back into the mainline. The heavy crude will then flow into Great Lakes region facilities, from which it can be shipped to the East Coast, or to Cushing, Okla., and ultimately the U.S. Gulf Coast.

No new permitting is required because Line 3 has been in operation for 45 years and already has sufficient permitting to carry various kinds of crude across the border.

When Completed, Pipeline Could Carry 760,000 Barrels/Day

Work is already underway on an upgrade and expansion of Line 3. With no mention of plans to use it to move Tar Sands crude across the border, Enbridge announced in March a $7 billion program to rehab and expand Line 3.  That project will increase flow capacity from a maximum of 390,000 barrels a day to 760,000 barrels by the time the upgrade is completed in 2017. Additionally, Line 3 will be re-designated as a “mixed service” line that can handle heavy crudes. Currently it is limited to handling only lighter crudes. However new, wider pipes are being added, and existing pumps along the line in the trans-border area already are capable of handling heavier liquids.

Enbridge’s Alberta Clipper/Line 3 workaround will ensure that large quantities Canadian Tar Sands crude will make it into the United States for refining and final distribution. But it is not a final resolution to the problem.

Enbridge’s application to push heavy crude across the border through the Alberta Clipper line itself at an even larger rate of 880,000 barrels a day remains, like Keystone’s application, on hold at the State Department. A decision on those requests is unlikely any time soon, and especially not before the November mid-term federal elections. Additionally, while the Alberta Clipper/Line 3 workaround eventually will allow up 760,000 barrels a day to flow into the United States, that flow will displace some or all of the lighter crudes that currently pass through Line 3. Those crudes will be shifted to other Enbridge cross-border pipelines.

TransCanada, Enbridge’s direct competitor, will continue to seek approval of its Keystone project. Meanwhile, it will continue moving heavy crude across the border on rail cars while it explores the option of moving Canadian Tar Sands crude to the West Coast via a pipeline that could be built through the Canadian Rockies.

Demand for Canadian Heavy Crude Pushes Pipeline Competition

Canadian Tar Sands crude is sold at a discount to world market prices, making demand for it very strong. Thus, supporters of its use say that environmentalists who are vehemently opposed to the Keystone project are fighting a battle that they ultimately cannot win – even if they successfully prevent the Keystone pipeline from being completed. Canada’s heavy crude, they say, will find its way to the global market one way or another.

The International Energy Agency and the U.S. Energy Information Administration both predict that global demand for the Canadian heavy crude will continue to rise.

Environmental groups reacted quickly to condemn Enbridge’s Alberta Clipper/Line 3 work-around plan for moving Canadian Tar Sands crude. Among other criticisms, those groups complain that the process of extracting tar sands crude is even more environmentally unfriendly than conventional oil drilling because it releases even more carbon into the atmosphere.

“Clearly Enbridge officials are searching for loopholes that would avoid environmental analysis,” said Kate Jacobson, a leader of MN350, an environmental group that has worked to slow or block the importation of heavy crudes from Canada.

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