After delays, cost overruns and other frustrations, bitumen production at the Kearl oil sands mine has reached a level that will start to push existing pipeline capacity.
Enbridge Inc. announced Thursday afternoon that it would build a $1.3-billion expansion to its Woodland pipeline system, connecting its Cheecham and Edmonton terminals through a 385-kilometer, 400,000-barrel-per-day pipeline. The company received regulatory approval for the project in August 2012.
Enbridge has already completed the portion of its Woodland pipeline that connects Imperial Oil Ltd.’s Kearl oil sands project with the Cheecham terminal.
Imperial’s Kearl project produced its first bitumen in the second quarter of this year, after long delays and ballooning costs brought the project’s original price tag up from an estimated $7.9 billion to an actual $12.9 billion. While the company hasn’t released its second quarter earnings yet, Kearl is expected to produce 110,000 barrels per day by the end of 2013.
As investors wait to see what production Imperial achieved in the second quarter at Kearl, the announcement of Enbridge’s pipeline expansion will only serve to heighten expectations.
Imperial plans to expand production by a further 110,000 barrels by 2015, which, incidentally, is the expected completion date of Enbridge’s Woodland pipeline expansion.
“Extension of the Woodland Pipeline will bring additional crude oil transportation capacity into the Edmonton area, enabling us to accommodate forecasted regional oil sands production growth from the Kearl project and other oil sands projects targeted for delivery into the Edmonton hub,” said Stephen Wuori, Enbridge president of liquids pipelines and major projects, in a Thursday afternoon press release.
This $1.3-billion pipeline expansion brings the total price for Enbridge’s planned projects with in-service dates between 2013 and 2015 to more than $4.3 billion. That number doesn’t include Enbridge’s proposed Northern Gateway project, which would transport 525,000 bpd of Albertan oil sands crude to British Columbia’s north coast.
Enbridge is still seeking regulatory approvals for the Northern Gateway, but says the announced projects worth $4.3 billion are being built “to service the increasing requirements of the Alberta oil sands producers.”
Imperial plans to reach 345,000 bpd of production at Kearl by 2020.
“Kearl is the largest project we’ve ever undertaken and the beginning of a period of substantial growth for the company that will see us double production to more than 600,000 barrels per day by about 2020,” Imperial chairman and CEO Rich Kruger said in an April press release. Now investors will have to wait and see how many barrels per day Imperial actually produced at Kearl since its announcement of first oil. Expectations will be high.
https://www.albertaoilmagazine.com/2013/07/enbridge-to-build-new-1-3-billion-pipeline-to-serve-imperial-oils-kearl-oil-sands-project/