Canada pipeline development facing headwinds

Long delays and uncertainty over North American trade policy not helping Canadian oil developments.
By Daniel J. Graeber  |  April 19, 2017 at 5:58 AM
share with facebook
share with twitter

April 19 (UPI) -- Delays in implementation and concerns about North American trade policies create uncertainty for the western Canadian pipeline development, analysis found.

A survey from IHS Markit of the pending or proposed pipeline networks in Canada, including Keystone XL, found the review process takes more than five years on average per project. Those time delays, along with U.S. President Donald Trump's pledge to reconfigure regional trade policies, leaves parts of the Canadian energy market in limbo, the report found.

"Lessons from the timing of Keystone XL and concerns over a possible resurgence of U.S. protectionism have highlighted the importance of market diversification," it said.

Canada is the No. 1 oil exporter to the United States and remains relatively landlocked because of limited pipeline capacity extending outside the country. Options may evolve, however, with Trump embracing the Keystone XL oil pipeline that would reach from Alberta to the southern U.S. coast.

A review of pending and recent pipeline developments in Canada from the research group found no major project could come online before 2019, leaving the country leaning on rail shipments for crude oil.

Rail is more expensive than pipelines for crude oil shipments and the derailment of railcars carrying crude oil through Lac-Megantic, Quebec, in 2013 left 47 people dead, making it the fourth-deadliest rail accident in Canadian history.

Canada has pushed to diversify its export options away from the United States. Pipeline company Kinder Morgan secured recent approval to expand the capacity of its Trans Mountain oil network to western Canadian ports.

In early January, Alberta Premier Rachel Notely said breaking Alberta's landlock with Trans Mountain fixes "a problem that has dogged our province for decades." Alberta's and the broader Canadian economy have suffered since crude oil prices drifted lower and Kevin Birn, the IHS director for regional energy projects, said the weak oil market has not diminished the need for more pipeline infrastructure from western Canada.

"Canada remains a growth story with production volumes increasing since the oil price collapse," he said in the report.

Related UPI Stories
Trending Stories