If robins are an early s sign of spring, could new infrastructure projects like storage tanks and pipelines be early signs of a recovery in oil and gas prices and activity levels?
The answer could be yes. What else would explain why a major pipeline company like Kinder Morgan is going ahead with the construction of a new $342 million 12-tank crude oil storage facility in Edmonton?
The project is a joint 50-50 venture with Keyera Corp. that is supplying the land for the project in anticipation of growing volumes of oil produced in the oilsands in northern Alberta.
Gibson Energy is thinking the same thing by continuing to expand its crude storage capacity at the Hardisty Terminal.
They are building two more tanks there to accommodate new oil supplies from the Fort Hills bitumen project north of Fort McMurray.
Those two tanks are part of a nine tank expansion that Gibson began in 2012.
In the Kindersley and Kerrobert area of Saskatchewan, pipeline companies are sticking with capital plans to build new pipelines.
These investments are clearly an indicator of their optimism in the future to move more oil.
Inter Pipeline Ltd. is spending $60 million this year on its $100 million Mid-Saskatchewan expansion announced last July when throughput volumes had doubled to over 70,000 barrels per day over the previous two years.
The $100 million expansion in the Kindersley-Kerrobert area will involve the construction of over 50 kilometres of new mainline pipe, 40 kilometres of new pipeline laterals and associated pumping and metering facilities.
Projects like these are considered the best indicators that growth in the region will continue.
Enbridge Inc. is also continuing to plan to replace its existing 34-inch diameter Line 3 pipeline with 36-inch pipe from Hardisty Alberta to Gretna Manitoba where it crosses into North Dakota.
When the $4.9 billion project for the Canadian section is approved, the upgraded pipeline will route through the Kindersley-Kerrobert area giving a boost to the regional economy.
Teine Energy completed its Plato Clean Oil pipeline to the Dodsland Battery in 2014.
Plains Midstream is also going to be enhancing its pipeline systems in the Kerrobert area.
In the Lloydminster area, Husky Energy is also proceeding with the expansion of its south Saskatchewan gathering system to transport sales oil from the Husky Edam Battery, and the Edam East, Edam West, Vawn, and Rush Lake thermal oil facilities to a main sales oil pipeline distribution system in the region.
Another sign of optimism for the future comes from the federal budget tax measures announced in April to support investment in liquefied natural gas facilities in Canada.
Industry also welcomes the funding increase to the National Energy Board this fiscal year to better engage with Canadians relating to energy transportation infrastructure.
The Canadian Association of Petroleum Producers responded to the news by stating that “with improved transportation infrastructure Canada can reap the benefits of helping meet global energy needs through safe, responsible development and delivery of its natural resources.”
Despite industry cuts to capital investment this year due to low commodity prices, CAPP reported overall capital investment by industry in 2015 is expected to be $49 billion.
That’s the highest of any sector in Canada and higher than the next two largest sectors combined which bodes well for future growth as commodity prices recover.
Another recent sign of optimism was the turnout at this year’s Williston Basin Petroleum Conference held in Regina April 28-30.
The organizers of the upcoming Bonnyville & District Oil and Gas Show June 17-18 reported better than expected sales of exhibit space as another sign of confidence.
Most importantly, the price of oil has lifted from its low point this year to give the industry a sense that the worst is over.
There are many signs led by infrastructure investment pointing to a recovery. All that’s missing to confirm it are more help wanted signs?