In this news, we discuss the Even Without Keystone XL, US Sets Record Canadian Oil Imports
CALGARY / NEW YORK (Reuters) – The Keystone XL pipeline project may be dead, but the United States is still poised to attract record imports of Canadian oil in the years to come through other pipelines in full expansion.
U.S. President Joe Biden canceled the Keystone XL license on the first day of his tenure on Wednesday, dealing a fatal blow to a long-running project that would have transported 830,000 barrels per day of heavy oil sands crude from Alberta to Nebraska.
Environmental activists and indigenous communities hailed the move, but traders and analysts said US-Canadian pipelines would have more than enough capacity to handle increasing volumes of crude outside Canada, the top foreign supplier of oil to the states. -United.
Currently, Canada exports about 3.8 million bpd to the United States, according to data from the United States Department of Energy. Analysts expect this to rise to between 4.2 million and 4.4 million bpd over the next few years. Pipeline expansions currently underway will add more than 950,000 bpd of export capacity for Canadian producers by 2025, according to Rystad Energy.
The Biden administration has set itself the goal of moving towards decarbonization and reducing the country’s dependence on oil and gas and reducing harmful air pollutants. Most of the country’s energy still comes from fossil fuels.
“Whatever limited profit Keystone was supposed to provide now, obviously there’s a need to reconsider today’s economy,” said Gina McCarthy, senior coordinator for Biden’s domestic climate policy at the White House.
Even without Keystone, however, the United States now depends on Canada for more than half of its imported oil. Several of the lines transporting this crude are expanding rapidly.
For a graph on US imports of surging Canadian oil:
Enbridge Inc’s Line 3 Replacement Project is doubling its capacity, allowing it to deliver approximately 760,000 bpd of Alberta crude to Superior, Wis., By the end of of the year.
The Government of Canada is also increasing the public Trans Mountain line from 590,000 bpd to 890,000 bpd. This line ends at the Port of Vancouver, where it should be able to deliver barrels via tankers to the United States.
Meanwhile, TC Energy received US approval last year to expand its existing 590,000 b / d Keystone line – located far from the Keystone XL project – which would add an additional 170,000 b / d to the market. American Midwest and Gulf Coast.
“We will be overloaded assuming the other pipelines go on schedule,” said Wood Mackenzie research director Mark Oberstoetter. “If you add them all up, you can argue that KXL was not necessary.”
Ongoing construction work on Trans Mountain and Line 3 could still be delayed by environmental protests, but unlike Keystone XL, both pipelines have removed legal and regulatory hurdles.
Oil production in western Canada will increase in 2021 to a new record 4.45 million bpd, estimates RBN Energy, up from 3.9 million bpd in 2020, most of which will be exported to United States.
Canada is the fourth largest producer of crude in the world, but has struggled for years with pipeline congestion. This has caused a glut of oil in Alberta’s storage tanks, lowered prices and prompted the province to impose production cuts to drain record stocks.
These cuts were lifted in November and production has grown steadily since. Even as production increases again, pipeline companies have improved the efficiency of existing pipelines through the use of drag reducing agents.
“While the politics around KXL will continue to resonate for some time, the reality is that western Canada – for the first time in recent memory – may soon reach a stage where it has excess oil export capacity. Rystad Energy vice president for the North American Shale Thomas Liles said in a note.
Reporting by Devika Krishna Kumar in New York and Nia Williams in Calgary; Additional reporting by Trevor Hunnicut in Washington DC; Editing by Andrea Ricci
Original © Thomson Reuters
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