Canadian oil pipeline capacity remains tight

By OGJ editors
HOUSTON, July 7 -- Canadian oil pipeline systems need additional capacity soon to accommodate growing supply and provide greater market flexibility, according to Canada's National Energy Board.

"Capacity constraints on oil pipelines in Canada were evident in 2007," said NEB Vice-Chair Sheila Leggett. "While there was some spare capacity, periods of apportionment meant that some pipelines were at times not able to fully meet shipper demand."

The high capacity utilization is driven by growing oil sands production and continued strong demand in the US. Although some capacity will be added in 2008, tight conditions will likely exist for the remainder of the year, officials said in their annual report on the 45,000 km of oil, natural gas, and product pipelines regulated by the NEB.

Most NEB-regulated gas pipelines have some excess capacity, even during the peak winter season. Throughput for most gas pipelines declined in 2007 due to declining conventional gas supplies from the Western Canada Sedimentary Basin, growing demand within western Canada, and competition from other supply basins, particularly in the western US.

The report said shippers remain reasonably satisfied with pipeline services. Key financial ratios of pipeline companies regulated by the NEB are stable, and credit ratings continue to be investment grade. As a result, pipeline companies can attract the financing necessary to maintain and expand their systems to meet demand, NEB said.

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