Some forces are undeniable, like gravity — or U.S. President Donald Trump backing more oil infrastructure.
On Thursday, the inevitable pull and push of Canadian crude into the orbit of the United States appeared to prove that point, as the American president signed off on a permit that could lead to a proposed cross-border pipeline.
Pitched by Bridger Pipeline LLC, the development would take oil from Western Canada at the border — moved through pipe built in Canada for the ill-fated Keystone XL system — and ship it to Guernsey, Wyo.
If Bridger makes a positive final investment decision, it’s anticipated the line would initially ship about 550,000 barrels per day (bpd). Oil would reportedly be transported to the U.S. border through South Bow Corp.’s pre-invested KXL infrastructure in Canada, if the Calgary-based company moves forward with its Prairie Connector project.
If the broader export project proceeds, the pipeline could arrive at a key moment for Canada’s energy sector as production increases.
Existing oil pipelines are expected to be running full later this decade, depending on the timing of planned optimization efforts of the Trans Mountain network and Enbridge’s Mainline system.
By 2030, Canadian oil production is expected to grow by about 500,000 bpd above last year’s levels, topping 5.8 million bpd by decade’s end, according to S&P Global Energy.
“Any takeaway capacity from the Canadian market, whether it’s gas or oil, is positive for the industry here in Canada,” Precision Drilling CEO Carey Ford told Postmedia on Thursday.
“The U.S. is our most important trading partner and we will continue to deliver energy to help secure North American energy dominance,” Premier Danielle Smith said in a social media post this week.
However, what does the Bridger proposal mean for Ottawa’s efforts to find new customers for Canadian products and become less reliant on U.S. trade flows?
And in Alberta, what could it ultimately mean for UCP government’s proposal to develop a new greenfield bitumen pipeline, capable of moving one million bpd to the West Coast for export to growing markets in Asia?
“Any movement forward on the development of market access related to oil is going to be positive . . . it sort of leads to the fact that the United States, over time, is going to continue to need access to Canadian oil,” Tristan Goodman, president of the Explorers and Producers Association of Canada, said Friday.
“We’re a natural place for them. Now, we would also like to diversify into other markets, so hopefully that isn’t the only situation that’s going to be happening — and we can actually move forward on some West Coast access.”
Goodman made the comments after the annual spring luncheon hosted by the Canadian Association of Energy Contractors (CAOEC), following a fireside chat with federal Natural Resources Minister Tim Hodgson.
Speaking to a crowd of more than 700 people, Hodgson emphasized the need to diversify and find new markets for energy.
He pointed out the federal government is regularly approached by customers around the world looking for more oil and gas. And once Canada can get its energy to international markets, it typically sells for a stronger price, he added.
“It is in Canada’s interests to be able to sell its natural resources to every ally we have,” not just south of the border, Hodgson said.
“It makes huge economic sense for Canada to get more of its resources to tidewater.”
Construction of the Trans Mountain pipeline expansion is seen in May 2021 in the Fraser Valley near Popkum, B.C.
The expansion of the Trans Mountain pipeline, which can ship up to 890,000 barrels per day of oil and products to the West Coast, has shown there’s an appetite for Canadian heavy oil in countries such as China and South Korea, as well as the U.S.
It’s helped reduce the discount on Canadian crude, which has boosted Alberta royalties and producer revenues.
Trans Mountain Corp. is examining plans to add 300,000 barrels per day (bpd) of new capacity by the end of 2028 through optimization efforts.
Enbridge has also discussed its strategy to expand its Mainline oil network by up to 400,000 bpd, which would increase shipments into the U.S. Midwest and Gulf Coast regions — the largest heavy oil markets in the world.
Meanwhile, Smith wants to double Alberta’s oil production to eight million bpd by 2035.
That would lead to more pipelines — likely in several directions — and experts note it’s cheaper to build a line that uses an existing right-of-way and existing infrastructure than a new greenfield development.
“The producers are largely the ones that sign up for the long-term commitments to essentially backstop the funding of these things,” said Mike Dunn of RBN Energy.
“The producers are thinking about market access. They are also thinking about what are the tolls going to be.”
The Bridger project will still need to lock up shipping deals and, given what happened previously with Keystone XL, it’s possible a future U.S. administration could reverse Trump’s decision.
But it seems inevitable more Canadian oil will flow into the United States in the coming years, said Heather Exner-Pirot, director of natural resources, energy and environment at the Macdonald-Laurier Institute.
The U.S. line should also help buy time for Alberta’s West Coast proposal to advance, and for producers to increase their output, she added.
“The question for me is: Can we attract enough investment to fill two million barrels of pipe?” Exner-Pirot said.
“It buys them time on the northwest (B.C.) coast oil pipeline and, frankly, I don’t mind taking the time to do it right, do the duty to consult, choose a good route and wait till the market is ready to fill it.”
Chris Varcoe is a Calgary Herald columnist.