TransCanada wants to convert approximately 3,000 kilometres of natural gas pipeline on its existing mainline route, plus build an additional 1,400 kilometres of new pipeline to carry crude oil from Western Canada to eastern markets.
The next five years will be crucial to the development of the oil industry in Westman, according to several industry employees.
Enbridge wants to replace a 20-kilometre stretch of pipeline near Cromer and a 40-kilometre stretch east of Brandon. (ENBRIDGE)
Two major pipeline companies — TransCanada and Enbridge — have proposals in front of the National Energy Board that, if approved, would track through southwestern Manitoba.
The pipelines are critical to increasing oil capacity to refineries in Eastern Canada and the United States to ensure that Canadian crude nets a fair price on the global market.
"Currently, there is not enough pipeline capacity and rail transport in the region to address growing energy needs," said Philippe Cannon, TransCanada’s Energy East pipeline project spokesperson.
TransCanada is proposing to convert approximately 3,000 kilometres of natural gas pipeline on its existing Canadian mainline route with an additional 1,400 kilometres of new pipeline to be constructed to carry crude oil from Western Canada to eastern markets.
The line would move 1.1 million barrels of oil per day.
Work on the project locally could begin as early as 2015-16. A new pipeline would have to be built between Cromer and Moosomin, Sask., where a tank farm
and compressor station will be located.
Additional pipeline in the province will be converted from natural gas to crude and all lines will have to be pressure-tested in order to meet the specifications resulting in several local jobs, according to Cannon.
"A $12-billion project will certainly create thousands of jobs during the construction and conversion stages of the project, but it will also create hundreds of jobs during the operational phase of the pipeline," Cannon said.
With more efficient methods of drilling and extracting oil — mainly directional drilling and fracking — the pipelines will provide access to markets for the growing number of barrels of oil being produced in the country.
Canada is the sixth-largest crude oil producer in the world and last year Manitoba produced 18.46 million barrels. At the moment, Canadian crude is being bought for pennies on the dollar as capacity and market limitations drive the price down.
With crude oil trading at approximately $104 over the last 12 months, at times Canadian producers are getting a fraction of that price.
"I wouldn’t be surprised if Manitoba slowed down or at least stayed where it is — didn’t get any busier," said one directional driller, who works in Saskatchewan and Manitoba and wished to remain anonymous.
With 10 years experience in the industry, the driller said wells are producing at higher rates in the province. He said the inability to get that crude to markets in Eastern Canada, the United States and overseas means any increased production has no route to market.
A new export facility in Cromer is set to make its first run in September. The terminal will initially load 50 tank cars carrying approximately 30,000 barrels of oil per day to eastern markets. Owned by Tundra Energy Marketing, the plan is to ramp up production to approximately 60,000 barrels per day.
Last week, Tundra vice-president Dean Clark said "every avenue that can move a barrel of oil to a new market is a good thing for the Canadian oil industry," something TransCanada and Cannon is in favour of as well.
At the moment, Eastern Canada imports more than 700,000 barrels of crude a day or about 86 per cent of its refinery feedstock from countries such as Saudi Arabia, Nigeria, Venezuela and Algeria.
"(The Energy East pipeline) provides Canada with the opportunity to become more energy independent and potentially replace all of the crude oil currently imported from overseas," Cannon said.
Shippers have also expressed interest in accessing ports in order to access export markets in the U.S, Europe and India.
"Accessing overseas markets will benefit all Canadians because it will ensure we get better value for our natural resources and reduce our trade deficit," Cannon said. "Supplying the world’s growing demand for energy will strengthen Canada’s energy sector, which is governed by some of the strongest environmental regulation in the world and provides jobs, tax revenues and economic growth across the country."
While every available method of transporting crude is a boon for the industry, pipelines are the safest, according to the U.S. Department of Transportation. In comparison to pipelines, accidents are 3,000 times more likely to occur with a large truck and 25 times more likely to occur by rail.
Even then, the pipeline has faced stiff opposition from environmental groups and lobbyists, who believe pipeline spills and subsequent environmental damage are happening far too often.
Cannon said a state-of-the-art system monitors the pipeline.
"We monitor our pipeline system through a centralized high-tech centre 24 hours a day, 365 days a year."
Republished from the Brandon Sun print edition August 30, 2013