CALGARY / NEW YORK (Reuters) – The Keystone XL pipeline project may be dead, but the US is still poised to attract record imports of Canadian oil in the coming years through other expanding pipelines.
US President Joe Biden canceled Keystone XL’s permit on his first day in office Wednesday, dealing a fatal blow to a long gestation project that would have transported 830,000 barrels a day of oil sands crude. from From Alberta to Nebraska.
Environmental activists and indigenous communities hailed the move, but traders and analysts said the US-Canada pipelines will have more than enough capacity to handle growing volumes of crude from Canada, the main foreign oil supplier to the United States. .
Currently, Canada exports around 3.8 million barrels per day to the United States, according to data from the US Department of Energy. Analysts expect that this figure will reach between 4.2 and 4.4 million barrels per day in the coming years. The pipeline expansions currently underway will add more than 950,000 bpd of export capacity for Canadian producers before 2025, according to Rystad Energy.
Biden’s administration has set itself the goal of moving towards decarbonisation and reducing the country’s dependence on oil and gas and reducing harmful air pollutants. Most of the nation’s energy still arrives from fossil fuels.
“Any limited advantage that Keystone was supposed to provide now must obviously be reconsidered with today’s economy,” said Gina McCarthy, Biden’s chief domestic climate policy coordinator at the White House.
Even without Keystone, however, the US now relies on Canada for more than half of its imported oil. Many of the lines carrying that crude are in the midst of expansions.
For a chart on US imports of the surge in Canadian oil:
Enbridge Inc’s Line 3 replacement project is in the process of doubling its capacity, which will allow it to supply approximately 760,000 bpd of crude oil from Alberta in Superior, Wisconsin by the end of this year.
The Canadian government is also expanding the state-owned Trans Mountain line from From 590,000 bpd to 890,000 bpd. That 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 U.S. approval last year to expand its existing 590,000bpd Keystone line, located far away. from the Keystone XL proposal, which would add another 170,000 barrels per day to the US Midwest and the Gulf Coast.
“We will be overloaded assuming the other pipelines are on schedule,” said Mark Oberstoetter, Wood Mackenzie’s director of research. “If you add them all, you can make the KXL argument unnecessary.”
Work in progress on Trans Mountain and Line 3 could still be held back by environmental protests, but unlike Keystone XL, both pipelines have eliminated legal and regulatory hurdles.
Oil production in western Canada will increase in 2021 to a new record of 4.45 million barrels per day, estimates by RBN Energy, rising from 3.9 million barrels per day in 2020, most of which will be exported to the United States.
Canada is the world’s fourth largest producer of crude oil, but has been struggling with pipeline congestion for years. This caused an excess of oil in storage tanks in Alberta, driving prices down and spurring the province to impose production cuts to drain record stocks.
These reductions were lifted in November and production has increased since then. Even as production is on the rise again, pipeline companies have increased the efficiency of existing pipelines through the use of drag reducing agents.
“While the politics around KXL will continue to reverberate for some time, the reality is that Western Canada – for the first time in recent memory – may soon reach a point where it has excess oil export capacity.” , Rystad Energy’s vice president for North American Shale Thomas Liles said in a statement.
Reportage by Devika Krishna Kumar in New York and Nia Williams in Calgary; Additional reporting by Trevor Hunnicut in Washington DC; Editing by Andrea Ricci