Regina – TransCanada has a lot of projects on its agenda - $46 billion, if they all go through. To put that in perspective, the entire revenue line for budget for the Province of Alberta for 2015-16 was $45.9 billion, before an estimated $8.3 billion evaporated with the drop in oil prices.
It’s big money, and these are big projects.
This program is comprised largely of a diversified mix of natural gas and liquids projects across Canada, the United States and Mexico, backed by either long-term take or pay contracts with 20 years or longer terms, or a more traditional service model.
The biggest is the proposed Energy East pipeline. The vice-president responsible for Energy East, John Soini, spoke to the supply chain forum portion of the Williston Basin Petroleum Conference. He highlighted numerous projects in the works, but Pipeline News focused on those affecting Saskatchewan.
He touched on the contentious proposed Keystone XL project, and said, “Despite best efforts to get a Presidential Permit, the project has moved into its seventh year of regulatory review in 2014.
“TransCanada and our shippers remain firmly committed to building the pipeline and appreciate the support of the majority of Americans who also believe that it is in the nation’s best interest.”
The original phase of Keystone, however, has safely transported over 830 million barrels of crude oil from Canada to the U.S. since it began operation in July 2010. With the completion of the Gulf Coast extension in January 2014, the system now provides a direct route for shippers from Hardisty, Alta. to the Gulf Coast refineries at Port Arthur, Texas.
If and when Keystone XL is approved, Soini said it would take approximately three years from granting of that Presidential Permit to completion. But that timeline depends on the time of year the permit is issued.
“We’ve got the pipe, we’ve got the pumps. We’ve got everything we need to put this together. It’s just a matter of getting over that hurdle to actually get it done,” he said.
Soini said he is a little biased towards Energy East “being the person solely accountable to build it.”
“It’s a pretty exciting project. It’s, quite frankly, a nation-building project. Basically it’s a Canadian solution to solve a Canadian problem.
“When we went out to the market to test the interest, we were actually overwhelmed by the response to our open season, and received approximately just under one million barrels a day of firm, long-term contracts to transport crude oil from Western Canada to Eastern Canada.”
In October 2014 TransCanada filed the largest regulatory filing in the company’s six-decade history for approval to construction and operate the Energy East pipeline.
The pipeline would have a 1.1 million bpd capacity.
The plan is to commence deliveries by the end of 2020, according to Soini. This is an apparent slippage from previous dates announced. Previous statements by TransCanada in late 2013 had anticipated it to be in service by late-2017 for deliveries in Québec and 2018 for deliveries to New Brunswick. That 2018 in-service date is still prominent on the project’s website.
The planned Cacouna, Que., terminal was deleted on April 2 due to concerns about whales in the St. Lawrence River. Potential alternative terminal options in Québec are being reviewed. Québec and New Brunswick refineries would continue to be connected directly to Energy East.
“The project essentially consists of converting 3,000 kilometres of existing natural gas pipelines across the Canadian mainline, and we would construction 1,600 kilometres of new 42-inch pipeline that would see us connect Hardisty to St. John, New Brunswick,” said Soini.
The project is expected to create 14,000 direct and indirect jobs during its development, and some of those have already begun.
One of the key engineering challenges will be the crossing of the St. Lawrence River. This will involve a 4.5 kilometre tunnel 3.5 to 4.5 metres in diameter under the river.
Soini said, “The Upland pipeline project is a $600 million pipeline that would provide crude oil transportation from multiple points in North Dakota and interconnect with the Energy East Pipeline at Moosomin, Saskatchewan.
“When constructed it will have the capacity of roughly 220,000 barrels per day and run approximately 370 kilometres.”
An open season for Upland in November 2014 successfully contracted 70,000 bpd in capacity on the proposed Upland pipeline. Subject to regulatory approvals, they expect this pipeline to be in service by 2020.
(Previous statements by TransCanada in February 2015 to Pipeline News have stated the capacity of the 20 inch line would be 300,000 barrels per day at full usage. Soini did not explain the discrepancy in his remarks.)
“We filed a DOS application for this pipeline just last week,” he said, referring to the United States Department of State.
As for the actual layout of the pipeline in Canada, he said to Pipeline News after his presentation, “We’re in the process of defining the Canadian portion, whether or not it’s going to go to Cromer, or it’s going to go to Moosomin. We’re in the process of determining that right now. I can tell you that pipeline is going to go to Northgate, Saskatchewan.
“We’re actually doing consultation activities right now on both routes. In terms of connection, we’re not going to be 100 per cent sure of that connection until we develop it fully.”
Cromer to Moosomin lateral
Pipeline News asked about the Cromer to Moosomin lateral, part of the Energy East project which would allow southeast Saskatchewan and southwest Manitoba oil to be shipped on the Energy East pipeline.
Soini said, “It’s actually going to be a complex system. When you look at Energy East, it’s a backbone system. It’s essentially a bullet line, so to speak. It’s going to be feeding refineries in Quebec and New Brunswick.
“But the feed into Energy East, one feed is Cromer. As we all know, there’s a hub there. There would be connections. We would obviously look for opportunities to connect to other pipelines with our pipeline system. That’s our business.
“At the end of the day, we continue to provide a service, and that’s to transport product for customers. If there’s interest to actually tie into these pipelines to transport that product to Eastern Canada, or for other markets, for that matter, we would be interested in doing that.
“That the same for Upland as well. The Upland system will also potentially connect to different intrastate pipelines and other market opportunities. That’s really key to our business.
“Cromer’s going to connect directly to Energy East,” Soini said.
The current filing for the Cromer lateral calls for a 16-inch pipeline. However, when asked by Pipeline News if a common pipe, larger might be used from Cromer to Moosomin, combining this lateral with the Upland pipeline, or running two pipes to Moosomin, he said, “We’re developing both (ideas) right now. What is the best thing here? What is the best alternative when you take everything into consideration?”
There will be connection points to the existing Cromer facilities, he said.
That 16 inch pipeline is also the same size as the Enbridge Westspur system, the only pipeline gathering system currently in place in southeast Saskatchewan. Asked about the possibility of shipping everything gathered on the Westspur system onto Energy East instead of the Enbridge mainline, he replied, “The way we size our pipelines is we go out with an open season. We determine what the level of interest is. From there we take that capacity and we identify potential spot capacity, and that’s how we size our pipeline.
“All the sizes of our proposed pipelines have to be justified, and that’s why it’s justified in our application in terms of size.”
When it was pointed out to him that the Cromer lateral, at 16 inches, would have the capacity to theoretically ship almost every drop of oil produced in southeast Saskatchewan, Soimi said, “That is the capacity (225,000 bpd) of that pipeline.
“I’m not able to actually go into detail due to the commercial sensitivities and confidential sensitivities of those discussions, other than what’s been filed in the applications and we’re developing the Canadian portion of that.”
Addressing the strong opposition to proposed pipeline projects, he said, “If the 12 per cent of folks who actually opposed the industry have such a stronghold and such an impact, that at the end of the day, there was a day when ‘silence meant support.’ Today, silence means you actually oppose it.
“If you’re not out front, actually supporting the oil and natural gas industry visibly out there, quite frankly, your message is not getting out there. The opposers and activists are taking a stronghold on us and having an impact,” said Soini.
“Quite frankly, they’re having an impact on major developments, major pipelines, that, to be honest with you, would significantly help this industry if we were able to safely build and operate these pipeline systems.”
He encouraged people to sign up as supporters of the project on the Energy East website.
Touching on safety, Soini said, “There’s nothing more important to TransCanada. It’s that simple.”
He added that pipelines are by far the safety means of transporting product, including oil and gas.
Concerns about water crossing are also among their biggest concerns, he added.