North American Oil Pipeline Projects Push On, Despite Market Crunch
Despite construction and market disruptions caused by COVID-19 as well as continuing opposition, the Canadian government-owned Trans Mountain oil pipeline expansion project began work this month on the $9.5-billion project's key British Columbia link.
Crews began work on a 7-kilometer first stretch around the city of Kamloops, B.C., of what will be 185 km of parallel pipeline built to the port of Burnaby, B.C., on the Pacific coast, continuing the expansion in its Alberta section.
Surerus Murphy Joint Venture is overseeing work on this section of the pipeline project.
The entire Trans Mountain expansion, intended to boost capacity of the original pipeline built in 1953, is tentatively set for completion in December 2022. An initial crew of 30-50 workers will swell to 600 when construction peaks in the late summer and early fall, Trans Mountain said in a press release, noting it has been working with local hotels on COVID-19 cleaning and safety measures.
Ian Anderson, president and CEO of Trans Mountain Corp., called the Kamloops section of the project “a key milestone” in the pipeline’s 600-mile route from oil fields near Edmonton, Alberta to Burnaby, B.C.
The firm is owned by the Canadian government, which bought the pipeline from Houston-based Kinder Morgan for $3.4 billion in 2018 to complete construction that had faced numerous delays.
The project, which was hit earlier this year with a 70% price increase, also has had a mix of financial and legal challenges and fierce opposition from some First Nations groups.
Canada’s Federal Court of Appeals earlier this year rejected environmental challenges from First Nations groups who live in the territory through which the pipeline is routed.
The court ruling is considered the last major legal/regulatory hurdle for the project, which was first approved by the federal government in 2016. The pipeline expansion is expected to triple its capacity to 890,000 barrels per day, up from 300,000 barrels currently.
A recent first-quarter earnings report indicated that the pipeline shipped an average of 297,000 barrels per day in the first three months of this year, below capacity, and also noted a steep drop in the price of western crude oil due to the pandemic and oil production competition between Russia and Saudi Arabia.
A Trans Mountain spokesman told CBC that while shipping requests are reduced, the pipeline remains at full capacity based on shipments of both light and heavy crude oil. It is the only North American pipellne that can ship both.
Meanwhile, an effort to expand the 1,172-mile Dakota Access pipeline, which extends from North Dakota to southern Illinois, gained some ground June 4 when Illinois regulators rejected a request from opponents to delay a decision on state permits for the proposed project because of the pandemic.
Environmental groups also argued that the COVID-19 impact on global oil use should negate the expansion. But Dakota Access developers said the situation is temporary, with demand to increase as world economies revive.
A final decision still is to come from the state Commerce Commission.
The expansion is set to boost capacity from 570,000 barrels of oil per day to 1.1 million and has already received approvals from North Dakota, South Dakota and Iowa.
Dakota Access still faces legal issues, with a U.S. District Court judge in Washington, D.C., set to rule on whether it can still operate while the U.S. Army Corps of Engineers completes a more detailed environmental study, based on a separate court ruling, of the pipeline's water-crossing permit.
The Standing Rock Sioux tribe, along with environmental groups and 36 House and Senate Democrats, have argued that the permit should be vacated, while 14 states have filed briefs claiming the move would cause severe project delays and economic harm.