Terasen Inc. is seeking to invest $1-billion to build twin pipelines in northern Alberta's oil sands, reviving plans for its 500-kilometre Bison route with an ambitious strategy to transport almost twice as much oil as originally envisaged.
Vancouver-based Terasen postponed construction of Bison in May, citing delays at oil sands projects by Petro-Canada and TrueNorth Energy LP. Terasen had originally contemplated spending $510-million on its Bison project to move 320,000 barrels a day through a single pipeline.
Now, in a bid to outmanoeuvre rival Enbridge Inc., Terasen says it intends to double the pipeline project's budget and construct two lines that would run from Fort McMurray, Alta., to Edmonton.
Terasen, formerly named BC Gas Utility Ltd., and Calgary-based Enbridge are each working on plans to transport oil supplies from Alberta to British Columbia.
Plans call for Terasen to build Bison over three stages, handling 172,000 b/d by 2006, then 320,000 b/d by 2008. The final phase would feature a second pipeline, parallel to the first, that would boost total shipments to 610,000 b/d by 2010.
In an effort to secure supplies at the source in Fort McMurray, Terasen is hoping to gain an advantage over Enbridge by locking up shipments from producers before they are redirected into B.C.
Terasen, Canada's third-largest pipeline operator, already runs the Corridor oil pipeline in the oil sands and owns one-third of the Express oil export line.
With massive expansions by producers planned in northern Alberta, Terasen and Enbridge are seeking to grab a large portion of new supplies of tar-like bitumen and synthetic light oil, said Karen Taylor, an analyst with BMO Nesbitt Burns Inc.
Terasen is targeting the enormous amounts of oil expected to flow from various projects involving firms such as Petrocan, ConocoPhillips Canada, Suncor Energy Inc., Husky Energy Inc., Canadian Natural Resources Ltd., Shell Canada Ltd., Nexen Inc., and Japan Canada Oil Sands Ltd.
"We're still calling it Bison, but Bison has changed quite a bit, in terms of what the project now looks like and who we would build it for," said Rich Ballantyne, president of Terasen's pipeline division. "We're in closed discussions with a number of parties. The likelihood is that there would be anchor tenants for the pipeline and the rest would come in afterwards."
Two months ago, Enbridge unveiled plans for its $2.5-billion Gateway pipeline that would carry 400,000 b/d from the Fort McMurray region to a B.C. port, either in Prince Rupert or Kitimat. Under the Gateway plan, three-quarters of those shipments would then be loaded onto tankers destined for California, while the rest would be earmarked for Asian customers.
Terasen's existing Trans Mountain pipeline network already carries 190,000 b/d from the Edmonton area to Greater Vancouver. There are plans to add 30,000 b/d of capacity by the third quarter of 2004.
Terasen announced last April that it is developing a long-term expansion program to twin its Trans Mountain line for $2.1-billion. The Trans Mountain system, which handles some oil from pipelines originating in Fort McMurray, could be expanded in three stages.
To build a line parallel to the existing route, the first phase would add 100,000 b/d of capacity between Edmonton and Jasper, Alta., and then another 100,000 b/d between Jasper and Kamloops, B.C. The final phase would boost capacity by 440,000 b/d between Kamloops and Vancouver. The first stage would cost $450-million, followed by expansions costing $700-million and then $925-million.
Nearly 200,000 b/d of the new supplies could be directed to a Terasen-owned export pipeline from British Columbia into Washington State's Puget Sound region, while the rest would fill West Coast tankers headed primarily for California.
Brent Jang