A few planned expansions of major pipelines in Canada could significantly enhance the volume of oil available for export from Western Canada. Collectively, these expansions amount to the equivalent of constructing a new large pipeline.
Enbridge, the largest pipeline system operator in the country, has put forward four expansion projects. The company, based in Calgary, has announced a $1.4 billion US investment to increase the capacity of its Mainline system by 150,000 barrels per day and add another 100,000 barrels per day to its Flanagan South pipeline. This initiative is set to be finalized by 2027.
Colin Gruending, Enbridge’s president of liquids pipelines, stated that these expansions align with the gradual growth in oil supply. These proposals are timely as Alberta pursues its own pipeline project and discussions are ongoing about reviving the Keystone XL pipeline, which previously failed.
Trans Mountain is proposing two enhancements to its pipeline from Edmonton to a port near Vancouver. While the physical size of the pipeline will remain unchanged, the Crown corporation is exploring the use of drag-reducing agents to boost oil transportation capacity. Additionally, they are considering constructing stronger pumping stations to increase oil flow through the pipeline.
Combined, these projects are expected to provide ample export capacity, even as oil production in Alberta continues to rise. Gruending expressed confidence that the optimizations by Enbridge and Trans Mountain will meet the increasing demand for oil transportation.
According to a report by TD Cowen, the country’s export pipelines are nearing full capacity and could reach maximum utilization by the fall of 2028. However, enhancing existing pipelines could create surplus export capacity for several more years, potentially extending into the mid-2030s with expedited expansions.
The total expansions are projected to add over one million barrels per day in shipping capacity, with Western Canada currently producing around 5 million barrels of oil daily. The country’s oil export capacity stands at approximately 5.2 million barrels per day.
Alberta Premier Danielle Smith’s recent proposal for a provincial government pipeline to the West Coast, along with discussions about reviving the Keystone XL pipeline, are considered speculative by TD Cowen. These initiatives, if pursued, would require significant development time and are seen as a “blue-sky” scenario.
Enbridge is advising the Alberta government on potential pipeline projects, including assessing the feasibility and business case for a new export venture. The company emphasized the importance of considering various factors, such as demand from oil companies and their commitment to long-term contracts, in determining the viability of a proposal.
As new pipeline capacity is anticipated in the coming years, the willingness of companies to engage in long-term commitments remains uncertain.