Christopher E. Smith
Pipeline Editor
EnSys Energy & Systems Inc. and Navigistics Consulting concluded in a report issued as part of the US Department of State's final environmental impact statement (FEIS) on TransCanada's proposed Keystone XL crude oil pipeline that it is "almost impossible…to conceive of a situation" wherein the anticipated 1.4 million b/d growth in Western Canadian Sedimentary Basin crude could not be shipped to the US, even if Keystone XL is not approved.
The report, "Keystone XL Assessment—No Expansion Update," examines three tiers of potential transportation: Tier 1, major new pipeline projects (Keystone XL and Enbridge's Northern Gateway pipeline to Canada's west coast); Tier 2, modification-expansion of existing pipelines; and Tier 3, rail, barge, and tanker transport. It notes that as options move from Tier 1 toward Tier 3 the capacity of individual projects drops and the $/bbl transport rate climbs. But it also notes that capital costs, scale of commitment, difficulty in permitting, and time to implement all drop, while available transport options expand.
The EnSys report describes rail alone as being able to provide the additional 1.25 million b/d in WCSB take-away capacity anticipated as necessary by 2030, subtracting 0.15 million b/d as upgraded-in-place. EnSys notes that the roughly 100,000 b/d/year expansion rate required is well below the current 250,000 b/d/year expansion rate currently undertaken in the Bakken shale, and equate to adding just 1-2 unit trains/day/year out of WCSB between 2016 and 2030.
EnSys examines options across all three tiers—including expanding-reversing existing pipelines, moving oil sands crude by rail to Canada's west coast for tanker shipment, and moving it by Great Lakes-tanker to accessible refineries and barge shipment via Chicago—before concluding that even if neither Keystone XL or Northern Gateway are built, WCSB crude will find its way to market.
The US DOS issued its FEIS Aug. 26 (OGJ Online, Aug. 26, 2011), finding Keystone XL would have limited environmental impacts. DOS still needs to determine whether the proposed project—which would consist of an 861.5-mile segment from Morgan, Mont., to Steele City, Neb., and a 483.8-mile segment from Cushing, Okla., to refineries in Houston, and Port Arthur, Tex.—is in the national interest.
Northern Gateway, which would transport 525,000 b/d of oil sands crude from near Edmonton to a tanker terminal in British Columbia for shipment to China, other parts of Asia, and California, was fully subscribed by long-term shippers as of Aug. 24, 2011. A line running parallel to the crude line would ship 193,000 b/d of condensate from the coast to Alberta. Shippers also agreed to long-term commitments on this line.
Enbridge expects to build Northern Gateway in 2012-14, pending regulatory approval of filings made in 2009. Enbridge is also still involved in discussions with First Nations representatives attempting to thwart construction of the pipeline.
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