Nine major players in Canada’s oil patch have signed on to ship crude on Kinder Morgan Inc.’s proposed expanded pipeline to a port near Vancouver.
Most of the pipeline’s customers, who signed 20-year agreements, are energy companies with major expansion projects under way in the oil sands. Kinder Morgan already moves oil to the west coast on its Trans Mountain network, and has proposed a $4.1-billion expansion.
The energy industry is lobbying hard for pipelines to Canada’s west coast, which would give producers access to Asian customers. This would push up profits because it would create a second market for Canadian crude, rather than relying solely on the United States.
However, while proponents argue the economic angle means access to the west coast should be an urgent priority in Canada, detractors stress this is outweighed by the environmental consequences of potential leaks along the route or a tanker spill in the ocean.
Kinder Morgan, in filing to the National Energy Board related to tolls Friday, said BP PLC, Canadian Oil Sands Ltd., Cenovus Energy Inc., Devon Energy Corp., Husky Energy Inc., Imperial Oil Ltd., Nexen Inc., Statoil ASA, and Tesoro Corp. have backed the pipeline.
Kinder Morgan said it has contracts in place to ship 508,000 barrels of oil per day on the network. After the expansion, Trans Mountain will be able to move 750,000 barrels of oil per day. It wants to leave about 20 per cent of the pipeline available for spot shippers. Trans Mountain’s current capacity is 300,000 barrels of oil per day.
The company asked the NEB to approve the firm shipping agreements it struck with the nine oil companies. Kinder Morgan plans to apply in 2013 for regulatory approval to build the expansion. Trans Mountain spans 1,150 kilometres.
“What this filing today is, is our request [to] the...National Energy Board for approval...of economic and commercial terms that underpin the economic viability of the project,” Ian Anderson, president of Kinder Morgan’s Canadian division, said in a conference call with reporters.
Enbridge Inc. is in the midst of regulatory hearings tied to its proposed Northern Gateway project. The route snakes from Alberta to Kitimat, B.C., and has sparked a fierce environmental backlash. While there is already an existing Trans Mountain line, its opponents argue increased tanker traffic near Vancouver is unwelcome. Both companies argue pipelines are the safest way to transport oil, and tankers are also safe.