Oil pipeline capacity constraints due, says NEB

By OGJ editors
HOUSTON, Aug.1 -- Canadian crude oil pipelines could be facing a transportation bottleneck this fall, according to a report released by Canada's National Energy Board (NEB) July 30. NEB regulates nearly 45,000 km of pipelines in Canada.

According to the report, "An Assessment of the Canadian Hydrocarbon Transportation System," Canadian oil pipelines this fall could be facing periods of apportionment, or line sharing, among shippers for as long as 18 months, because no significant additions to the Canadian pipeline system are planned to come on line before 2009. And a surge of crude production is expected from Alberta's oil sands, NEB said.

According to the regulator's 2006 Canadian Energy Overview, Canadian oil production is expected to rise 9% to 2.9 million b/d this year, due largely to increased demand for Canadian crude in the US.

Natural gas pipelines, on the other hand, have adequate capacity and some spare capacity, even in winter, when demand for natural gas traditionally jumps, the report said.

The report noted that pipeline companies regulated by NEB "are able to attract the financial resources needed to maintain their systems and meet the needs of the changing market, but some pipeline companies and investors have raised concern over their future ability to attract capital, given their current return on equity ratios," NEB said.

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