By Amanda Stephenson and Arathy Somasekhar CALGARY, Aug 18 ( ) - Canadian pipeline firms are proposing billions of dollars in new projects despite oil sands companies being reluctant to commit to significant production expansions amid ongoing uncertainty around climate policies and long-term global demand. At least six different pipeline projects are underway or proposed in Canada, to move oil to the United States or to export markets on the Pacific coast. If all are built, the country's export pipeline capacity would increase by 45%, or 2.25 million barrels per day, by 2035, according to a calculation.
But filling all those pipes would require Canadian oil supply to increase by more than a third by 2034, a near-doubling of its current annual average growth rate. It would also require Canadian producers to move ahead with major new oil sands projects of the type that no company has undertaken in more than a decade. The mismatch between proposed export pipeline expansions and the pace of output growth highlights how Canada may struggle to achieve Prime Minister Mark Carney's "energy superpower" ambitions, despite a more supportive regulatory environment and growing interest in Canadian oil from international buyers.
Both Suncor Energy and Canadian Natural Resources said this month they are not yet willing to accelerate plans for production increases. Pipeline operator Enbridge said in July it is postponing plans for a second phase of its Mainline pipeline expansion, one of the six new projects, as customers failed to commit to capacity increases. "Producers are behaving with discipline," Enbridge's executive vice-president for liquids pipelines Colin Gruending said on a conference call.
"I think they'll get there. We were just a little too quick off the line here." Canada is the world's fourth-largest oil producer and a major energy exporter, shipping some 90% of its output to the United States. Northern Alberta's oil sands hold vast reserves but existing crude export pipeline capacity is almost full.
In the short-term, global buyers are increasingly interested in Canada as the Iran war disrupts oil trade flows, and Carney says he wants to grow Canadian oil exports to help the national economy withstand tariff threats from U.S. However, uncertainty about the longer-term impact on demand from domestic and global climate policies and geopolitics is clouding the production growth picture. Of the six Canadian pipeline projects, incremental capacity expansions like those underway or proposed for the Enbridge Mainline and Trans Mountain system could be done quickly and at a relatively low cost.
But a project such as Alberta's proposed 1-million-bpd east-west oil pipeline to the Pacific coast would be a much riskier bet due to its sheer size and scale. About half of capacity expansions, or about 950,000 bpd, would ship oil to the U.S., including a proposal for a new crude pipeline that would revive parts of the former Keystone XL project. Building new pipelines has in the past been fraught with political risk and environmental opposition, while low prices, regulatory uncertainty and investor focus on shareholder returns have stifled investment needed to significantly boost oil output.
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