Oil-rich Alberta needs to dramatically increase its output and further expand its export pipeline capacity to satisfy a potential heavy crude shortage in the US Gulf coast, according to the province's premier.
"We need to double our production in Alberta," premier Danielle Smith told the CERAWeek by S&P Global conference in Houston, Texas, on Tuesday.
"I still feel like we would be able to massively increase our production even with the existing pipeline infrastructure," said Smith, but signaled that more pipelines out of Canada will be needed to satisfy the US Gulf coast's massive refining complex.
Canadian crude producers will soon have greater access to the Pacific coast via the federally-owned 590,000 b/d Trans Mountain Expansion (TMX) project, but construction delays have made for a return in pipeline congestion — a hallmark for the landlocked province — and concern has grown that the new line will also fill up sooner than later.
"We've got a few years to grow," said Smith. By the province's estimates, production could still expand from about 3.8mn b/d today to 6.1mn b/d using existing egress options. That, however, will not be enough in the long run to meet heavy oil demand abroad, according to the premier.
"There's going to be a shortfall [in supply in Texas] so I'm challenging our industry to be able to meet that that future demand," said Smith. "If I want to double things, I'll need another pipeline or two."
Midstream companies have had difficulty building pipelines in Canada over the past decade because of heightened regulatory oversight and permitting processes, which are no longer traits unique to the northern country. Despite this, the premier remains "very bullish" on expanding production of both oil and natural gas and is prepared to lower emissions on the fly.
On the increasing call for decarbonization across the oil and gas sector, the premier says there is a lack of understanding about what transition truly means.
"I look at it as a transition away from emissions, not a transition away from production," said Smith. There is a "lack of realism about where solar, wind and batteries fit into the mix," noting each have a role to play, but the baseload power required will come primarily from natural gas until more progress is made with small nuclear reactors.
By Brett Holmes
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- BUILD the EXPORT PIPELINES and MEG and the other Canadian producers will be MORE THAN HAPPY to PROVIDE the HEAVY CRUDE OIL {AWB, WCS etc.}
- MEG has the PRESENT Chistina Lake PIPELINE INFRASTRUCTURE to TAKE BOP to 210,000 bbls/d from the present 110,000 bbls/d and 125,000 bbls/d in 2026
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