Category Archives: Oil Sands

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MATCOR is a full service provider of customized cathodic protection systems to the oil & MATCOR_Vertical_webgas, power, water/wastewater and other infrastructures industries.  Cathodic Protection is a technique used to control the corrosion of a metal surface by making it the cathode of an electrochemical cell.  MATCOR has an array of proprietary cathodic protection products and systems combined with high-quality corrosion engineering services, and installation and maintenance services.

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TransCanada ‘West-East’ Oil Pipeline Moves Forward

TransCanada Corp. has moved a major step forward on its plan to ship Western Canadian crude to the country’s eastern refineries and export facilities, so far facing few of the political hurdles that have dogged other pipeline projects aimed at moving crude out of Alberta.

The Calgary-based pipeline giant said Tuesday that it has launched a formal process to acquire shipping commitments from energy companies for the Energy East Pipeline, which could reach New Brunswick’s Irving Oil Ltd. refinery and port of Saint John.

TransCanada said it is confident in gaining such support, and will then file for regulatory review with the goal to begin shipments by late 2017.

“We’re committed,” said Jeff Matthews, Irving Oil’s director of business development. The proposed pipeline “increases our ability to compete in a tough industry by allowing our refinery access to a crude supply region in Western Canada that has not been accessible in the past,” he said.

The west-to-east project – unveiled just a year ago – is gaining considerable momentum at a time when other pipeline projects such as TransCanada’s Keystone XL and Enbridge Inc.’s Northern Gateway face uncertainty amid political friction and environmental concerns.

Energy East is expected to largely handle light oil, along with some heavy crude from the oil sands. As a result, projects such as the Keystone XL and Northern Gateway pipelines will still be needed to bring Alberta’s vast oil sands reserves to market.

The proposed Energy East Pipeline would carry as much as 850,000 barrels a day of western crude to eastern markets, with an option of either stopping in Quebec or extending it to Saint John. At its maximum, it would be 4,400 kilometres long, including the conversion of TransCanada’s underutilized natural gas line to a point near the Ontario-Quebec border, and new construction from there to Saint John.

The Saint John facility is Canada’s largest and most complex refinery. Mr. Matthews said oil producers are also interested in accessing Irving’s Canaport marine terminal for export.

With support from a wide range of politicians, Energy East now faces the acid test of commercial viability as producers weigh competing projects and the appeal of various markets.

While Alberta producers have been keen to reach the huge refining hub on the U.S. Gulf Coast, or access fast-growing markets through Asia, the Eastern Canadian market appears to be their most problem-free alternative, at least in the short term. But there is limited capacity to process oil sands bitumen at refineries in Ontario, Quebec and Atlantic Canada.

Keystone XL, which would carry bitumen to the Texas Gulf Coast, has encountered lengthy delays from the Obama administration in the face of fierce criticism from environmentalists. The company says it remains confident of eventual approval, but the political risk remains high.

At the same time, Northern Gateway – which aims to transport oil sands crude to Kitimat, B.C., for export to Asia – has run into a wall of opposition from First Nations, the environmental community and the B.C. New Democrats, who may well win government in the upcoming provincial election.

The eastern pipeline proposal has won broad endorsement from the federal government, the New Democratic Party opposition, and New Brunswick Premier David Alward. Quebec Premier Pauline Marois has been consulted on the project and has given support in principle.

IHS Inc. analyst Jackie Forrest said the industry would face 1-million barrels per day of pipeline over-capacity if all the proposed projects were completed on schedule in the 2015 to 2018 time period.

“However, producers are looking for market options – so it is possible we would see a future scenario with excess pipeline capacity,” Ms. Forrest said. “And since we expect oil sands to grow beyond 2020, this extra capacity would be needed in the early part of the next decade.”

SOURCE: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/transcanada-moves-ahead-on-ambitious-plan-to-pipe-oil-to-quebec-nb/article10663042/

Enbridge – Work on pipeline to begin later this year in Michigan

A portion of a large-diameter interstate crude oil pipeline that runs through Oxford and Addison townships (Michigan) is due to be replaced later this year by Canadian-based energy distribution company, Enbridge Inc.

Enbridge, Inc. will begin work on Oxford and Addison’s portions of what is known as Line 6B at some point between June 1 and Dec. 31, according to Jack Manshum, a spokesman for the company.

“That’s the plan as of right now,” he said. “We’re in the process of developing the construction timeline.”

Line 6B is a 285-mile crude oil pipeline that begins in Indiana, crosses southeastern Michigan and ends in Sarnia, Ontario, Canada. It serves refineries in Michigan, Ohio and eastern Canada.

This year, Enbridge plans to replace approximately 50 miles of Line 6B with new 30-inch diameter pipeline (the same size as the existing one) from Ortonville to the St. Clair River in Marysville. The portion that runs through Oxford is approximately 6.5 miles in length, while Addison’s portion is approximately 6 miles long, according to Manshum.

This is part of a much larger construction project that spans approximately 210 miles across Michigan and Indiana.

The Michigan Public Service Commission approved Enbridge’s application for this phase of the pipeline project on Jan. 31

“We’ve haven’t formally announced the details yet as to when we’ll be in each county or in each area,” Manshum said. “We’re in the middle of outlining that entire plan. So, I don’t know exactly when we’ll be in Oakland County.”

The old underground pipeline will not be removed to make way for the new one. It will be left in place.

“It will run parallel and adjacent to the existing line that’s in place now using the same right-of-way,” Manshum said. “When the new line is tied in and activated, the old line will be deactivated.”

Deactivation will involve purging all the oil from the old line and cleaning it thoroughly to remove any remaining crude, he explained. The old line will then be “taken apart in small segments” and capped.

“Each chunk of that pipe will have caps on it and then it’s filled with nitrogen,” Manshum said. “We will monitor the pressure inside that line as long as the line exists. The reason you fill it with the nitrogen and you monitor the pressure is to help make sure it doesn’t have any internal corrosion.”

With regard to the line’s exterior, he said Enbridge will maintain the cathodic protection that’s already on it to ensure there’s no external corrosion either.

Enbridge can’t simply walk away from the old pipeline.

“It’s a federal requirement,” Manshum said. “You have to maintain it as if you were using it.”

Manshum explained that leaving the old pipeline in place is “pretty standard in the energy transportation industry.”

“To completely take that line out of service, then replace it with a new one” is not practical for Enbridge’s customers, which are oil refineries.

“(The pipeline) would be out of service for six to 12 months – there would be no product flowing through (it),” Manshum said. “(The refineries) don’t have enough storage capacity to go that long.”

Once the new line is up and running, why can’t Enbridge come back and remove the old one? “That’s more of an inconvenience for landowners,” Manshum said. “We’re already there during one construction season, digging up their property, creating the trench.”

If Enbridge returns for another construction season, the workers will “basically redig everything that we just put back into place the year prior.”

Manshum noted it would involve the “same amount of time and process” to remove the old pipeline as it did to install the new one.

“It’s much less disruptive to landowners for us to only be in there once, instead of having to come back,” he said.

SOURCE: http://www.clarkstonnews.com/Articles-News-i-2013-03-20-250883.113121-sub-Work-on-oil-line-to-begin-later-this-year.html

Keystone XL Pipeline Passes Emissions Test

The proposed Keystone XL pipeline to bring heavy oil from Canada to the south of Nebraska has cleared an important hurdle, after an environmental impact statement concluded it would have only a marginal effect on greenhouse gas emissions.

The state department study argued that production in the oil sands of Alberta would increase even if the pipeline were not built because companies could make more use of rail transport to reach US refineries.

It also suggested that building Keystone XL would create more than 42,100 jobs across the US for one to two years, although once in operation it would support just 35 permanent jobs.

The conclusions make it more likely that President Barack Obama’s administration will approve the controversial project, which has become a battleground for the oil industry and environmental campaigners.

Formally, the state department has responsibility for deciding on the pipeline, because it crosses the border from Canada.

The pipeline would carry diluted bitumen from the oil sands – also known as the tar sands – which create higher levels of greenhouse gas emissions than many other forms of oil production.

Alison Redford, premier of Alberta, praised the study as “extensive, exacting and comprehensive”.

TransCanada, the company behind the project, addressed earlier concerns about leaks from the pipeline by re-routing it away from the environmentally sensitive Sand Hills area of Nebraska.

The new route is 875 miles long, and could carry up to 830,000 barrels of diluted bitumen per day to Steele City, Nebraska, where it will connect with a southern section already under construction. The aim is to connect to refineries on the Gulf of Mexico coast that are configured to use heavy oil including Canadian production.

The pipeline could also take some production from the fast-growing Bakken shale of North Dakota, the heart of the new US oil boom.

The state department study suggests that the oil sands of Alberta will be developed whether or not Keystone XL is built.

It argues: “Approval or denial of any one crude oil transport project, including the proposed project [Keystone XL], remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the US.”

Blocking Keystone XL would cut output from the oil sands by only 0.4-0.6 per cent by 2030, the study said. Even if all new pipeline capacity were restricted, oil sands production would drop just 2-4 per cent.

The study argues that other transport routes, particularly rail, would be capable of “providing the capacity needed to transport all incremental Western Canadian and Bakken crude oil production to markets if there were no additional pipeline projects approved”.

The state department will now take comments about the study, before a final decision from the administration on whether the pipeline is in the US national interest.

SOURCE: http://www.ft.com/cms/s/0/9763476c-82b3-11e2-8404-00144feabdc0.html

CEPA: Report Uncovers Diluted Bitumen Not Corrosive…

A report published on February 25 by a division of the UK-based Penspen engineering firm reveals diluted bitumen is no more corrosive than conventional crude.

Brenda Kenny, President and CEO, of the Canadian Energy Pipeline Association (CEPA), is pleased with the results of the report, which finally dispels the myth that industry critics have been spreading regarding the transportation of diluted bitumen.

“We have always known, based on scientific facts and our pipelines operational histories, that diluted bitumen is no more corrosive than conventional crude,” Kenny said. “Now, this manufactured myth can stop and Canadians can be further assured that our pipelines are safe regardless of the type of product they carry.”

According to CEPA, the report examined 40 studies addressing the behavior of diluted bitumen and conventional crude.  In these studies, which spanned over 40 years, the research concluded that diluted bitumen is no more corrosive when compared to conventional crude oil.

“It is important to have scientific evidence in front of Canadians, so they can make their own informed decisions, and not rely on misinformation”, Kenny said.

The report also showed that tests were carried out using internationally recognized standards, which found that small differences in some components of the product did not increase the chances of corrosion developing in oil transmission pipelines.  In addition, monitoring and preventative maintenance programs used by transmission pipeline operators on conventional crude oil pipelines were equally as effective on pipelines containing diluted bitumen.

The Canadian Energy Pipeline Association represents Canada’s transmission pipeline companies who operate approximately 110,000 kilometres of pipelines in Canada. In 2011, these energy highways moved approximately 1.2 billion barrels of liquid petroleum products and 5.3 trillion cubic feet of natural gas. CEPA members transport 97 per cent of Canada’s daily natural gas and onshore crude oil from producing regions to markets throughout North America.

SOURCE: http://www.cepa.com/new-report-reveals-diluted-bitumen-not-corrosive

Shippers keen on TransCanada’s natural gas line conversion to carry crude eastward

EDMONTON – TransCanada Corp.’s plans to convert one of its main natural gas lines to carry crude oil from Alberta to Quebec and likely on to the Maritimes is set to move into high gear.

The firm said Tuesday it is considering an open season for shippers within a few months, and will schedule consultations with communities along the 4,800-kilometre route as soon as it is appropriate to do so.

And if all goes well, TransCanada will file for regulatory approval by the end of 2013, with construction to begin in 2015 and the line in operation by 2017. It could have a capacity of about one million barrels per day, sending light oil from Alberta and Saskatchewan as well as synthetic crude from oilsands upgraders to Eastern refineries that currently import expensive oil from Africa and the Middle East.

“There is a great deal of interest, we are advancing discussions with shippers and are pleased the way they are going,” said Alex Pourbaix, the firm’s president for energy and oil pipelines, during a conference call Tuesday to discuss fourth-quarter earnings.

Based on expressions of interest, TransCanada expects to have an open season for shippers within a few months, allowing firms to make formal commitments. He said when intentions are clear and a route proposed, TransCanada will immediately begin consultations with communities along the route.

The existing pipe that ends in Montreal has the necessary size for the conversion process, but east of that TransCanada expects it will install new pipe along its existing rights-of-way.

“We know there is 400,000 barrels per day of demand in the domestic market of Quebec (from refineries in Montreal and Quebec City) and a further 400,000 barrels per day in the Maritimes, largely at Irving’s refinery in Saint John,” said Pourbaix.

But while domestic demand is the initial target, there are also export possibilities to the U.S. eastern seaboard.

“(The U.S.) is importing 1.5 million barrels a day and that suggests a market for domestic production to attach to that market,” said chief executive Russ Girling.

The idea of cutting through Maine to shorten the route to the Maritimes is a non-starter for TransCanada, with Pourbaix stressing that the new streamlined National Energy Board approval process offers certainty to project builders.

For TransCanada, the stalled Keystone XL line from Hardisty south to Oklahoma is perhaps a good example of the kind of costly delays they hope to avoid.

But Pourbaix said Tuesday final approval seems to be only a few months away. He said the firm has been led to believe an amended environmental impact statement should be approved in a matter of weeks.

“At that point, we are of the view that the U.S. State Department will have every piece of information it could require to make a decision,” he said, adding that when the required statutory notice periods are included, the department should be able to make a decision in two to three months.

TransCanada also explained details of its recently announced $3 billion, 500-kilometre Grand Rapids pipeline project, a 50 per cent joint venture with Phoenix Energy Holdings to bring diluted bitumen from Fort McMurray to the Edmonton region and transport diluent northward.

The dual line will be built in stages, with the smaller pipe in operation by 2015 and carrying diluted bitumen. When the larger 900,000 bpd pipeline is completed by mid-2017, the smaller line will revert to carrying 330,000 bpd of diluent north.

For the fourth quarter, TransCanada said profit fell 19 per cent as shipments on natural gas pipelines declined. Net income dropped to $306 million, or 43 cents a share, from $376 million, or 53 cents, a year earlier.

TransCanada is moving less natural gas because a glut in North American supplies has reduced prices, resulting in more of the fuel being kept in storage. Deliveries on its Canadian Mainline system fell 19 per cent to average 4.2 billion cubic feet a day during the quarter.

“While the majority of our assets continued to generate stable and predictable earnings and cash flow, plant outages at Bruce Power and Sundance A along with a lower contribution from certain natural gas pipelines did adversely affect our financial results,” said Girling.

SOURCE: http://www.edmontonjournal.com/technology/Shippers+keen+TransCanada+natural+line+conversion+carry+crude+eastward/7955127/story.html#ixzz2Kng7Fr00

Canadian Pipeline proposal is a realistic option, expert says

A pipeline bringing crude oil from Alberta to New Brunswick could be more realistic than building a pipeline to the west coast, according to an energy expert.

Premier David Alward is in Alberta for three days to meet with Alberta Premier Alison Redford, oil executives and tour the oil sands in an attempt to drum up support for a pipeline to New Brunswick.

Warren Mabee, director of the Institute of Energy and Environmental Policy at Queen’s University, said TransCanada Corporation’s proposal to convert an existing natural gas pipeline might be more realistic than other plans to move Alberta oil to the west coast.

“It’s caught a little bit of the public imagination,” he said.

“This is something that really would bring together a lot of Canada. The real question is, will it bring us together? Or will it open up more wounds and more divisiveness?”

The energy expert said the terrain is relatively flat between Alberta and New Brunswick, making the idea feasible.

If the west-to-east pipeline were to be approved, it would still take several years before western crude would be flowing into Saint John’s Irving Oil Ltd., the largest refinery in Canada.

Mabee said it would take five years if the project started now.

TransCanada Corporation has said it wants to convert an existing, underused natural gas line to do the job, but it would be up to the National Energy Board to approve the projects.

TransCanada has not yet formally submitted the proposal.

SOURCE: http://www.cbc.ca/news/canada/new-brunswick/story/2013/02/04/nb-pipeline-future-119.html

Nebraska governor approves Keystone XL route

Nebraska Gov. Dave Heineman has approved TransCanada Corp.’s revised route for the Keystone XL pipeline, clearing the way for a final decision from U.S. regulators on the project that would bring Canadian oil to the Texas coast.

The new route avoids Nebraska’s Sand Hills, an environmentally sensitive region overlaying the Ogallala aquifer, the state’s main source of groundwater. The pipeline will still cross the aquifer, though in a less sensitive area, according to a letter Heineman, a Republican, sent Tuesday to President Barack Obama and Secretary of State Hillary Clinton informing them of his decision.

“Keystone would have minimal environmental impacts in Nebraska,” Heineman said in the letter. “The concerns of Nebraskans have had a major influence on the pipeline route, the mitigation commitments and this evaluation.”

Heineman requested that Nebraska’s environmental review and route approval be added to the study underway by the State Department, which has authority over the project because it crosses an international border. TransCanada executives have said U.S. approval for the pipeline could come by the end of March. Victoria Nuland, a spokesman for the State Department, said the review won’t be ready by then.

“Keystone XL is the most studied cross-border pipeline ever proposed, and it remains in America’s national interests to approve a pipeline that will have a minimal impact on the environment,” Russ Girling, chief executive officer for the Calgary-based pipeline company, said Tuesday in an emailed statement.

Supporters of the 1,661-mile project have said it will provide thousands of jobs and help the United States avoid dependence on energy sources from politically unstable places. Critics have turned the pipeline proposal into an environmental debate over Canada’s oil sands and the heavy crude’s contributions to air and water pollution. Blocking pipeline transport of the oil to markets in the U.S. and overseas might jeopardize development of the resource.

TransCanada’s original permit request to build the $7.6 billion pipeline, planned to stretch from Alberta’s oil sands to Gulf Coast refineries, was delayed and ultimately rejected last year by the State Department after Heineman and other Nebraska officials criticized the route.

The project should now get “the final green light,” Sen. Mike Johanns, a Nebraska Republican who opposed TransCanada’s original route, said in a statement. “I hope President Obama will swiftly approve the project so we can take a significant step forward in meeting our energy needs.”

After the initial proposal was rejected last year, TransCanada broke the project into two pieces, one running from Alberta to Steele City, Neb., and the other from Oklahoma to Texas refineries. Construction has begun on the southern portion of the pipeline, and environmental activists have been arrested in several areas of Texas after staging protests or chaining themselves to construction equipment.

SOURCE: http://www.mysanantonio.com/business/article/Nebraska-governor-approves-Keystone-XL-route-4215201.php#ixzz2Itv8K5O1

Investment in Canada’s natural gas sector set to rival the oil sands

Canada’s natural gas sector could emerge as an investor magnet surpassing interest in the oil sands over the next two decades, The Conference Board of Canada forecasts show.

Natural gas could attract as much as $386-billion in investments by 2035 and create 3.2 million person-years of employment (or an average of 131,460 jobs annually), says the Conference Board of Canada in a new report. This compares to $364-billion investments expected in the oil sands and equal job growth during the period, according to an earlier Board study.

“There are similar numbers on the total investment… in general we see a lot of demand for energy,” Pedro Antunes, co-author of the report, told the Financial Post. “The oil sands have already seen a lot of investments in the last few years, and going forward there will be a lot of activity, but sooner or later it will ease off as we get into production mode.”

The investment surge in natural gas will generate $940-billion in direct and indirect economic growth, including $364-billion directly to the country’s GDP over the forecast period, the Board said in a report published Monday.

British Columbia will lead the natural gas investment charge, attracting $181-billion, with Alberta garnering $154-billion from 2012-2035, the Board estimates.

The report echoes British Columbia Premier Christy Clark’s comments last week that the province’s natural gas industry will rival the oil sands in the future.

“Think about it in these terms: what oil has been to Alberta since the 1970s-80s is what LNG is going to be for British Columbia, nothing less than that,” Ms. Clark told The Canadian Press. “Energy output from LNG will likely be as big as the total energy output today from the oil sands.”

The symbiotic relationship between Alberta’s oil sands and natural gas will only strengthen in future. To fuel their rising output, bitumen producers will triple their natural gas consumption to 1,200 billion cubic feet per year by 2035.

While oil sands, power and transportation sectors will revive the country’s natural gas production, it’s British Columbia’s plans to export liquefied natural gas to Asia that would help liberate the commodity’s price.

Canadian natural gas prices are trailing near a decade-low at $2.88 per million British thermal unit, and production is falling as the U.S. — the industry’s biggest customer — is in the midst of its own shale gas revolution.

While the Board does not expect all the planned LNG projects to proceed, the new industry will need another 1,200 billion cubic feet per year of natural gas by 2035 to satisfy energy-thirsty Asian markets.

Such market access will be crucial to lift commodity prices as the oil and gas sector is currently beholden to the U.S.’s energy revolution, says Michael Binnion, president of Questerre Energy Corp., with interests in Quebec and Alberta shale deposits.

“If you take what we export to U.S. in natural gas discounts and discount on oil price, it is $20-billion to $30-billion we are sending to America in the form of subsidies,” Mr. Binnion said at an oil and gas conference last week. “If I was a citizen of Alberta or federal government and getting $30-billion less royalties and taxes…., there is reason for everybody to be concerned about infrastructure issues.”

While Alberta and B.C. will rake in majority of the natural gas royalties, taxes and revenues, Ontario and Quebec will also see their manufacturing industries benefit from the boom’s trickle-down effect.

Things could look even rosier for Quebec if the province lifts a moratorium on shale gas drilling. The Board expects Quebec to attract more than $6-billion in investment from 2020 onwards if the ban is lifted.

While the Board’s forecast is “prudent” in its assumptions, Mr. Antunes says there are other downside risks that could derail investment potential, such as LNG projects which may not go ahead — although it it unlikely.

Another key risk is a collapse in crude prices due to the North American output glut, similar to what happened in natural gas.

“There are certain risks that oil prices could be weaker and thus, investments in the oil sands, which are highly natural gas-intensive, affect a lot of the demand for natural gas,” Mr. Antunes says.

SOURCE: http://business.financialpost.com/2012/12/17/canadas-386b-natural-gas-investments-set-to-rival-oil-sands/

Canada to Build Oil Pipeline to Serve Asia

‘The U.S. market will not be large enough to accommodate all of Canada’s oil exports,’ said Natural Resources Minister Joe Oliver.

Canada is scrambling to build an expansive new oil pipeline network to reach new markets including Asia as its sole customer, the United States, hikes production, aiming to become the world’s top exporter.

Canada holds the third-largest oil reserves in the world but 98% of its oil exports and 100% of its natural gas shipments go the United States. This has made Canada the top energy supplier to its neighbor.

But that could soon end.

The United States is seeing a boom in shale gas and offshore oil production as it strives for energy independence, and the International Energy Agency recently said the U.S. could become the world’s top oil producer by 2020.

This week, Canada’s Natural Resources Minister Joe Oliver urged a fix: build more pipelines to move oil from landlocked Alberta province to both refineries in eastern Canada and the Pacific coast to fill tankers bound for Asia.

“The U.S. market will not be large enough to accommodate all of Canada’s oil exports,” Oliver said.

“By 2035, Canadian oil exports will be 4 million barrels per day, but total US imports will only be 3.4 million barrels per day. This highlights the need for Canada to access new markets,” Oliver added.

The federal government has put its weight behind several new pipeline projects, but the initiatives face stiff opposition from environmentalists and regional authorities.

“We’re already lacking outlets for the oil now being produced — existing pipelines are at capacity,” said Marco Navarro-Genie, a researcher at Calgary-based Frontier Centre for Public Policy.

“We’re forced to sell our oil at $22 below market value because we can’t get it to any market outside of North America,” Navarro-Genie said.

READ MORE: http://www.industryweek.com/energy-management/canada-build-oil-pipeline-serve-asia