Canada’s Connacher Oil and Gas Announces Pipeline Project
Connacher Oil and Gas expects to have a 18,000 barrel per day oil pipeline from its Great Divide oil sands leases near Fort McMurray, Alberta, completed by the second half of 2022.
Following a thorough assessment of the alternatives and commercial negotiation of transportation arrangements with third party carriers, the company filed an application with the Alberta Energy Regulator for a 26.5 kilometer (16.5 mile), 10-inch diameter pipeline that will have an initial capacity of 18,000 barrels per day (bpd). Connacher received AER approval Dec. 21 to build this sales oil pipeline lateral from its Great Divide project.
The pipeline is expected to be completed by the second half of 2022 and will provide Connacher with access to a liquid market hub for the sale of its product. While the in-service date is dependent on the company's financing efforts, this new pipeline will reduce Connacher's transportation costs and increase market access. In addition to enhanced access for blended bitumen, Connacher is also pursuing alternatives to improve access and reduce costs of diluent.
While 2020 was a challenging and unprecedented year for the energy sector, Connacher advanced several key initiatives in the second half of the year to position the company for the future. Earlier in the year, following the precipitous drop in crude oil prices caused by the COVID-19 pandemic, Connacher significantly reduced production from its Great Divide operations in order to preserve cash. As prices began to recover, production was safely ramped back up to pre-COVID levels towards the end of the second quarter. While there are many challenges remaining in the sector, including pipeline egress out of the basin and the regulatory environment, the company exited 2020 in a relatively strong position to take advantage of an improving economy post-COVID and enhanced market access as major pipeline projects come into service.
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