More Alberta oil to flow to West Coast

Application for expansion pushes $2.6-billion TMX Project closer to reality

Gordon Jaremko
The Edmonton Journal
Thursday, February 23, 2006

EDMONTON - Traffic on Alberta's oil route to the West Coast will jump in early 2007 then again by late 2008 in a two-step, $600-million expansion project.

For the second time in eight months, Trans Mountain Pipe Line applied to increase delivery capacity on its 1,150-kilometre connection to Vancouver from Edmonton.

The Canadian Association of Petroleum Producers backed the new request Wednesday to the National Energy Board, in the second industry endorsement of the pipeline's growth program since last July.

Support still stops short of commitment to all of a $2.6-billion Trans Mountain growth plan, called the TMX Project, that includes a new spur to Kitimat or Prince Rupert for loading Alberta oilsands output aboard ocean tankers, CAPP vice-president Greg Stringham said.

But the latest NEB application also moves the pipeline and oil shippers closer to a decision on building TMX as a megaproject that would put Alberta production into vast Asian markets, said Trans Mountain spokesman Philippe Reicher.

"We are currently working with our customers and shippers to define what the next stage of expansion will be," said Ian Anderson, president of Trans Mountain owner Kinder Morgan Canada (formerly Terasen).

The industry also continues to consider backing the rival $4-billion Gateway Pipeline proposal by Enbridge Inc. for an all-new oilsands route from Edmonton to Kitimat, B.C., Stringham said.

Both projects claim support from potential Asian customers for Alberta production. The competition centres on which plan offers the lowest-cost route to new markets that would pay the best prices as oilsands output grows beyond needs of traditional export destinations in the United States.

Trans Mountain's two-step expansion will mainly enable oilsands developers to increase shipments to British Columbia and Washington State, the line's destinations since it was built 53 years ago, Stringham said.

The $200-million first stage, approved last year and entering construction, will add 35,000 barrels a day to the system's capacity as of April, 2007, by putting new pumps on the old pipeline.

The new, $400-million second step, titled TMX Anchor Loop and scheduled for construction in 2007-08, includes two more pump stations. But the 40,000-barrels-daily project mostly involves laying 159 kilometres of new pipe between Edson and Valemount, B.C., that could become the starting point for the ocean export megaproject, Reicher said.

The two projects will increase Trans Mountain's delivery capacity by 33 per cent to 300,000 barrels per day.

Some new oilsands deliveries will flow into tankers at the pipeline's Westridge wharf in Vancouver harbour, Reicher predicted.

The terminal currently loads one or two ships per month with Alberta production, mostly for deliveries to refineries along the Pacific coast of the U.S. but occasionally for voyages to Hawaii, Japan, Korea or China.

Oil imports by refineries in California, Oregon, Washington and Hawaii will grow by about 70 per cent to 1.6 million barrels a day over the next 10 years, says a market forecast commissioned by Trans Mountain. The plants have to replace declining production from Alaska and southern California, the report says.

Asian oil markets, led by growing China, already buy 14.4 million barrels a day of imports and show increasing interest in reducing their reliance on the volatile Middle East, the report says.

gjaremko@thejournal.canwest.com

© The Edmonton Journal 2006