Two new pipelines opened last week allowing more Canadian crude to reach refineries in Texas
Canadian Premier for Alberta, Jim Prentice, and the Canadian minister for natural resources, Greg Rickford, were both in Texas last Friday celebrating the opening of two new pipelines transporting crude oil from Canada to the Gulf of Mexico.
The two pipelines, the Seaway pipeline and the Flanagan South pipeline, are both in the United States, but they will be used to transport oil from Canada down to Cushing Oklahoma and then on to refineries in Texas. The Flanagan South line is a 600 mile, 36-inch diameter pipeline with an operational capacity of approximately 600 MBOPD that originates in Pontiac, Illinois, and terminates in Cushing, according to its owner, Enbridge (ticker: ENB). The Seaway, which is a 50/50 joint venture between Enbridge and Enterprise Products Partners (ticker: EPD), is a 500 mile, 30-inch diameter pipeline with a capacity of 850 MBOPD that then runs from Cushing, Oklahoma, to Freeport, Texas, where it can then be sent to refineries in the Greater Houston Area.
Speaking by teleconference in Texas, from the endpoint of the newly finished Seaway, Mr. Rickford said that the two projects will help double Canadian shipments to the Gulf Coast to 400 MBOPD this year. While some of the oil shipped through the new pipelines will be for the U.S. Rickford says that it will also help Canada diversify its customers, reports Global News. “While exports to the United States remains a significant cornerstone piece of our market diversification strategy, there is no question that market diversification for Canada means creating new opportunities for new markets,” said Rickford.
Federal Finance Minister Joe Oliver also stressed the importance of reaching new markets in a speech last week, saying, “It is a matter of urgent national interest that we move our oil to tidewater because our only customer, the U.S., has found vast amounts of shale oil and gas and will need us less and less. If we do not access new markets our resources will be stranded.”
Canadian crude will continue to reach the Gulf, even without Keystone
As TransCanada’s (ticker: TRP) Keystone XL pipeline remains the focus of a great deal of debate in the U.S., pipelines like the Seaway and Flanagan South continue to bring Canadian crude oil across the border and throughout the United States.
Even as the interstate portion of the pipeline continues its stint in legislative purgatory, TRP celebrated the one-year anniversary of the Gulf Coast pipeline, the Cushing-Nederland, Texas, portion of Keystone that the company built while waiting for approval from the White House for the cross-border section. The Gulf Coast pipeline as a maximum capacity of approximately 830 MBOPD, according to TransCanada.
Even as TransCanada and others, including Jim Prentice, continue to lobby Washington for Keystone approval, Canadian crude will continue to find its way to market. Speaking to Oil & Gas 360® after the Energy and Finance Discussion Group meeting, Stuart Bergman, Export Development Canada Assistant Chief Economist and Director of Economic and Political Intelligence Centre, said Canada will find other options if Keystone does not pass. “[Canada is] losing too much money not getting the oil sands to market. If we don’t see Keystone XL pass, there will be an east-west route.”
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