1/11/05
Energy goliaths draft multibillion dollar oil pipeline expansion plans to feed world demand via Prince Rupert or Kitimat
Paul Harris
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If approved, the competing schemes proposed by Enbridge Inc. and Terasen Pipelines, a subsidiary of Vancouver based Terasen Inc., would hike the volume of oil moving through B.C. a day.
Both projects are early phase - but both draw on the continued long term global demand for energy resources.
Calgary based Enbridge, whose oil network centres on eastern Canada and the U.S. Midwest; wants to create a 30-inch-diameter, 1,200-kilometre long pipeline running from either Fort McMurray or Edmonton to either Prince Rupert or Kitimat. The 400,000 barrel a day pipeline project would cost an estimated $2.5 billion and would include the construction of a new storage and transportation depot on B.C.'s coast.
Later is year, Enbridge hopes to secure provisional support from shippers to transport the crude, and, pending regulatory approvals, the company claimed pipeline construction could begin by 2008 and would be operational by 2009 or 2010.
"Prince Rupert has a deepwater port and can accommodate tankers, so there is greater capacity to move greater volumes of crude throw northern ports," said Ian La Couvee Enbridge's public affairs manager.
"We are talking about brand new markets for western Canada for crude oil, which has only been served in a very minimal
way from Vancouver. There is huge demand."
During the first nine months of 2004, Enbridge recorded $540.5 million in earnings, or $3.23 per share, compared with $639.9 million, or $3.87 per share, for the same period in 2003.
Terasen's project is as am ambitious as Enbridge's. It has detailed two opportunities: to either create a new $2.57 billion pipeline corridor to Prince Rupert or Kitimat or to loop an existing pipeline between Edmonton and Burnaby to create a dual pipeline system costing $2.27 billion.
Enbridge has ruled out routing oil along a similar cross country path towards Burnaby, said La Couvee.
Terasen Pipelines president Richard Ballantyne said that, if approved, both of its proposals could come to fruition over time - but that right now only one would likely proceed.
"At the present time, it would be an 'either-or' decision; that is an awful lot of oil to consider sending westward," he said.
There is much to consider.
"There are producers in Calgary that are very interested in the Far East," he said.
"There is an awful lot of interest from China to invest in the oil sands and the transportation path to China. But supplying California makes a lot more sense out of Vancouver than the north coast."
Ballantyne said Terasen can currently move 240,000 barrels of crude a day. Should either of its projects for B.C. materialize, it would expand its daily capacity by 550,000 barrels.
He added that Terasen hoped the first phase of its plans would come on stream by late 2006, with the additional pipeline
capacity ready in late 2008 or 2009, depending upon which goes ahead.
Before Christmas, Terasen's current and prospective customers were mailed the project outlines to allow shippers to determine the scale and scope of the expansion.
And during the second quarter of this year, Terasen plans to seek agreements with shippers for firm long term transportation capacity on the expanded system, to meet demand in the Lower Mainland, Washington state, California and fast growing Far Eastern markets.
Terasen reported earnings of $89.8 million, or $0.86 per share, for the first nine months of 2004 - a rise of $15.8 million, or $0.15 per share, compared with corresponding results for 2003.
Moving crude south by ship would diversify supply channels for both companies and would likely prove cost effective, said Brian Moghadam, manager of business development at Vancouver based energy marketers Powerex Corp. "That would allow them to move product over different means if markets were more attractive to them elsewhere."
pharris@biv.com
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