January 2024, Vol. 251, No. 1

Editor's Notebook

Editor’s Notebook: In Canada, A Tale of Two Pipelines

By Michael Reed, Editor-in-Chief

(P&GJ) – Well, well, well. It looks as if Canada is likely to be in the market for some new pipelines if word that the nation’s oil and gas producers plan to drill 8% more wells in 2024 comes to pass. 

That’s what the Canadian Association of Energy Contractors (CAEC) predicted recently, saying the “potentially” soon-to-be open Trans Mountain oil pipeline expansion will prompt producers to take advantage of the increased capacity set to occur early this year.  

(Editor’s note: I prefaced “soon-to-be” with “potentially” in the paragraph above, due to a recently rejecting proposed construction change to the oil pipeline expansion, which Trans Mountain said could result in a borehole for the pipeline becoming compromised and lead to a further delay.)

In its tally, the CAEC calculated producers will drill 6,229 wells during 2024, representing an increase of 481 over 2023, with most of that occurring in the second half of the year. 

Canada, currently, is the fourth-largest oil producer in the world, but its output only accounted for roughly 14% of the global total this year, most of that being comprised of crude from oil sands. 

Another big win for the industry, this time on the gas side, should take place in early- to mid-2024, with the Coastal GasLink announcing its final weld was in place, Oct. 7, and hydrotesting was underway. 

The 422-mile (670-km) TC Energy-owned Coastal GasLink will supply a British Columbia LNG plant, owned by Shell, and will stretch from Dawson Creek to Kitimat. The LNG Canada plant is expected to start up in 2025 and allow Canadian gas to be exported outside of the United States to Asia. 

For an industry that’s been hampered by bottlenecks and significant price discounts for oil and gas in recent years, news of a pair of major projects coming on line so close together has been a long time coming. 

“Our Canadian energy sector is on the cusp of adding significant pipeline takeaway capacity for both crude oil and natural gas,” President and CEO Executive Officer of Whitecap Resources Grant Fagerheim said during the company’s third-quarter earnings call. White Cap is a Canadian public oil company based in Calgary, Alberta. 

Of course, as mentioned above, there are, as with all things involving pipelines, a few caveats. As of this writing, the Trans Mountain project is threatened with further delays stemming from the Canada Energy Regulatory (CER) denial of a variance of a variance on construction. 

The project, at the moment, is about 6 miles (10 km) of pipe away from completion in British Columbia. Once that is finished, commissioning work will begin and the pipe will be filled with 4.5 million barrels of oil over a 40-day period. Obviously, this latest setback could push the shipping schedule beyond its end of March 2024 schedule. 

Once completed, though, hopefully during the second quarter at the latest, the expansion will transport an additional 590,000 bpd of Alberta oil to Canada’s Pacific Coast, adding to the 300,000 bpd of existing capacity. 

Both pipelines have faced what some would say were more than their fair share of hurdles along the way, including those of the naturally occurring variety. 

As recently as late October, the CER approved a route change application for the Trans Mountain, which deviated the route on a 0.8-mile (1.3-km) section near Kamloops, British Columbia, because micro-tunneling construction would “most likely fail” on that terrain. 

In the case of the Coastal GasLink the overall complexity of the project itself should not be forgotten. After all, its route crosses  two mountain ranges and 10 major water crossings. Additionally, the project’s location made it necessary to implement sophisticated erosion controls due to the potential for mudslides, as well as measures to account for drought – an unusual combination.  

“Coastal GasLink is one of the most complex projects, certainly in my career, that I’ve never seen before,” said Bevin Wirzba, TC’s executive vice-president in charge of Canadian natural gas pipelines, at a late-2022 in investors’ meeting in Toronto.  

From a midstream perspective, the completion of both projects will have been well worth the wait and effort. 

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