Syed Rashid Husain Of the numerous new, emerging frontiers on the global energy horizon, Canada is one major destination. It has resources – and enough of it. And not only it has the potential to become a leading player in the world of oil and gas, it has also the will and determination to move ahead and raise its global energy profile. It is already playing a crucially significant role in the emerging energy independence of North America, and Ottawa is now seriously endeavoring – targeting to play – a further enhanced role and profile on the global energy circuit. But is has its constraints too. Ottawa is faced with real impediments in the realization of its targeted goal. It may have resources – and in abundance – none can dare deny. Yet how, and indeed where to market its resource remains a major issue – a source of virtually never-ending debate in Ottawa. And in its bid – to match its exports with its resource base, the Canadian energy sector is coming up with new ideas. A new strategy of utilizing a larger portion of crude domestically and add value to its natural resource has also been unveiled in recent days. This is a significant development.
Various combinations and permutations have been on Ottawa's drawing board for some time now. Two projects have been specifically under spotlight in recent years. Foremost has been the Keystone XL pipeline – to transport oil sands bitumen from Western Canadian Sedimentary Basin in Alberta to refineries in the Gulf Coast of Texas. The project would have expanded the ability of the existing pipeline by 830,000 bpd. However, the project is yet to get off the ground – after years of waiting – embroiled in constant debate – for want of US approval. It has become a pet target of green groups. Another major project, being considered to overcome this strangulation has been the Enbridge's planned pipeline to the West Coast of Canada. This proposed, twin 1,170 km long, Enbridge Northern Gateway Pipelines, is to run from Bruderheim, Alberta, to Kitimat, British Columbia. The eastbound pipeline is to import hydrocarbon natural gas condensate and the westbound pipeline would export bitumen from the Athabasca oil sands, diluted with the condensate, to a new marine terminal in Kitimat, from where it could be transported to Asian markets by oil tankers. This would have also helped Ottawa cultivate new customers in far-off Asia, breaking the US stranglehold on its crude exports. This project too has come under heavy criticism from the aboriginals, rejecting the intrusion of an oil pipeline on their lands. In the meantime, a new development has just been announced. It has been reported that TransCanada Corp is planning to build one of the world's longest oil pipelines to transport Canadian crude eastward. This project has reverberations far beyond Canadian shores. This planned 2,700 mile, $12 billion 1.1-million barrel per day (bpd) pipeline, to bring crude from Alberta to refineries and ports on the East Coast of the country, has the potential to revitalize the once ailing refinery industry on the east coast. This mega project, carrying almost 30 percent of the Canadian output in today's term, could alter the face of the energy industry in the country. “The initial stage of this project will be primarily about sending light sweet crude to Canadian refineries,” Mark Routt, a senior energy consultant at KBC in Houston. That could effectively wipe out Canada's need to import crude for its eastern refineries. The refineries are importing around 700,000 bpd from North and West Africa and Latin America. And in case the pipeline is completed on time, Africa and Latin America will have to find a new home for their barrels by 2017 or 2018. The twinning of the project with a plan to build and operate a new deepwater export port in Saint John, New Brunswick will also give oil producers an outlet for the 400,000 bpd or so of leftover after Canada's eastern refineries consume their share. “The next stage would be to potentially expand the project to ship light sweet crude to refineries on the US East Coast,” Routt said. Several refineries on the US East Coast have shut down in recent years due to poor economic performance. Access to Canadian sweet crude, cheaper than European and African imports due to transportation costs and the lower US benchmark price, could support those plants. And while this Energy East Pipeline could also reinforce North Sea Brent crude as the world's premier benchmark, Ottawa appears keen to exploit other options available for transporting its crude resources. Suncor Energy Inc. says it plans to begin receiving crude oil shipped by rail from Western Canada at its east-end Montreal refinery by the end of the year. Thousands of barrels of oil are to be shipped by train through the city of Montreal and other island municipalities to be processed at the company's refinery on Sherbrooke St. E. in Pointe-aux-Trembles, the company announced. The news comes despite the July's train derailment in Lac-Mégantic, where an estimated 5.6 million liters of crude oil was spilled into the soil, waterways and air around the small Eastern Townships community from a train carrying oil from North Dakota. Suncor isn't the only Quebec refinery that will receive rail shipments of oil in the near future. Valero Energy Corp., the company that owns the Ultramar refinery in Lévis, also plans to receive oil by train before the end of the year. North American oil companies have increasingly turned to railways for transportation because of a shortage of pipeline capacity. According to the Canadian Railway Association, shipments of oil by rail in Canada have skyrocketed from 500 carloads in 2009 to an expected 140,000 carloads in 2013. That's equivalent to 230,000 barrels of oil each day, the association says. The thrust on expanding the customer base, both inside and outside Canada, overcoming in the process the reliance on a single customer - the US - and being able to send the black gold to far flung places of the world, remains one of the cherished goals of the Canadian energy industry. Still tough times seem coming to the energy markets. Producers need to be aware. Canada seems bent on making a niche for itself in the current global energy order. And it does not appear far off from the ultimate prized goal!
