CALGARY — Executives with crude shipper Enbridge Inc. say increased Venezuelan crude exports would not undermine its plans to send more Alberta oilsands barrels to Texas refineries.
“The U.S. Gulf Coast is the world’s best heavy refining market and Canadian crude is a meat-and-potato part of the diet there,” Colin Gruending, president for liquids pipelines, told analysts on a conference call Friday.
Refineries along the Gulf of Mexico were initially built to handle the heavy crude produced in Venezuela. But as volumes from the South American country dropped amid economic and political strife and U.S. sanctions, barrels from Canada with a similar chemical makeup have been filling the gap.
However, less than one tenth of Canadian exports to the U.S. are bound for the Gulf Coast, with the lion’s share headed to the Midwest.
Enbridge has announced plans to increase that in the coming years through a series of expansions to its cross-border network.
In November, it announced it will proceed with the first phase of its Mainline Optimization project, which will see 150,000 barrels per day of capacity added to its vast cross-Canada system, the backbone of the country’s oil transport infrastructure that taps into the U.S. Midwest.
The US$1.4-billion plan will also add 100,000 barrels per day of capacity to the Flanagan South system, enabling greater volumes to flow from Illinois to the U.S. Gulf Coast.
Enbridge has said a second Mainline Optimization phase could add another 250,000 barrels per day of capacity in 2028.
The company has not appeared spooked by events in Venezuela that occurred two months after that announcement.
In early January, the U.S. military captured former leader Nicolas Maduro and removed him from power. U.S. President Donald Trump has since been courting U.S. energy majors to revive Venezuela’s beleaguered energy sector, which in recent years has been able to only tap a tiny fraction of its massive potential.
That’s raised the spectre of Venezuelan barrels pushing Canadian ones out of the Gulf Coast market.
“It’s early days and certainly the longer-term outcome there is uncertain,” said Gruending. “But we’ll see how quickly Venezuela grows its production. Then we’ll also need to evaluate what portion of that increased supply growth comes to the U.S. Gulf Coast.”
Some Venezuelan oil might continue to travel by sea to international buyers, like China, as sanctioned shipments have been doing via a so-called “shadow fleet.” Gruending added that there’s also some untapped refining capacity in the U.S. Gulf Coast and the possibility for more Canadian crude to be shipped overseas via the Gulf of Mexico.