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Enbridge CEO Sees Pipeline Overcapacity to U.S.
News Articles Featured | Bloomberg | Sonja Franklin, Julie Hyman and Mark Crumpton | October 07, 2009
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Oct. 7 (Bloomberg) — Enbridge Inc. said pipeline companies have overbuilt capacity from Alberta to the U.S. in the hopes of capitalizing from a boom in the Canadian oil sands before crude prices fell from a record high.
The extra capacity could reach 200,000 to 400,000 barrels a day and will be used when companies like EnCana Corp. and Suncor Energy Inc. start production of new projects in the oil sands, said Chief Executive Officer Patrick Daniel.
“There is no doubt that we are going to have overbuilt the pipeline capacity needed ex-Alberta,” Daniel said in an interview with Bloomberg Television in New York today. “A good part of this is already committed, but the projects have yet to be developed that will bring that production on stream.”
Enbridge, the biggest shipper of crude from the oil sands, said yesterday it is in talks with producers such as EnCana, Suncor or Husky Energy Inc. to transport more of their crude on its existing Athabasca and Waupisoo conduits. About 20 percent of daily U.S. oil imports come from Canada, according to the U.S. Energy Department.
Enbridge hopes to benefit from new oil-sands projects such as EnCana’s Narrows Lake, which may produce as many as 120,000 barrels a day. EnCana expects to file for regulatory approval for the project in 2010 and hasn’t specified a start date.
Enbridge also plans to build a pipeline to transport oil from Exxon Mobil Corp.’s C$8 billion ($7.5 billion) revived Kearl oil-sands project, which is expected to start up in 2012.
Kearl was “the first real big new development since the downturn,” Daniel said. “There are a number of other projects that are in the development phase over the next little while.”
Price Decline
Oil prices dropped to $44.60 a barrel at the end of December from a record of $147.27 in July of last year as the global recession curbed demand for energy. They have since gained 56 percent, reaching $69.68 a barrel on the New York Mercantile Exchange today.
The oil sands, located 750 kilometers (466 miles) north of Calgary, are the world’s biggest crude reserves after Saudi Arabia’s. Output from the tar-like sands may almost double to 2.2 million barrels a day by 2015, the Canadian Association of Petroleum Producers estimates.
