On October 5, 2017 TransCanada Corp announced that it had scrapped its Energy East Pipeline project. The termination of the 1.1 million (mn) barrel per day (bpd) Energy East Pipeline has a significant impact from TransCanada’s perspective, but the impact for the broader Canadian crude market will not be as pronounced. While the Hardisty-Saint John route would have provided valuable Atlantic Basin market access, Genscape believes that the advancement of three other pipeline projects out of Canada significantly reduces the need for the project in the current market environment. The combination of ENB Line 3 (+370 Mb/d), KMI Trans Mountain Expansion (+590 Mb/d), and TRP Keystone XL (+830 Mb/d) will add enough capacity to support Western Canadian Production growth when the first of the three, Line 3, comes online in early 2019, with TMX scheduled for late 2019 and KXL in late 2020.
Genscape’s Canadian Crude Oil Production Forecast currently has approximately 700 Mb/d of production growth from 2017 to 2021, with the majority of growth coming from new projects in 2017 and 2018, including SU Fort Hills (+194 Mb/d) and CNRL Horizon Phase 3 (+80 Mb/d), ramping up through 2018. While the three new projects will provide ample space for barrels to make it out of Western Canada, the more immediate concern for most producers is the pipe capacity constraints from today until the first of these projects come online, with heavy grades already pushing up against capacity in 2017. ENB has been working on optimization on their mainlines to free up space for the heavy grades, however with the continued production growth, Genscape expects to see WCS-WTI differentials widen as heavy lines fill up and crude-by-rail is priced in, beginning in 2018.
In terms of pipeline capacity utilization, TransCanada’s existing 590,000 bpd Keystone pipeline from Hardisty to Steele City is already operating above nameplate capacity, averaging nearly 625,000 bpd in September, according to Genscape’s proprietary pipeline data. Enbridge’s 2.67mn bpd Mainline system (Lines 1-4, 67) averaged nearly 2.47mn bpd in September, with most of that spare capacity available for light and medium grades.
Genscape’s Canadian Crude Oil Production Forecast uses a highly detailed bottom-up approach that examines the most significant oil producing areas in Canada providing a detailed production forecast and analysis. The report incorporates provincial well level data along with oil sands in-situ project and upgrader level data to provide the most accurate and detailed driven supply forecast report on the market. Click here to learn more about the Canadian Crude Oil Production Forecast.
Genscape's Canadian Pipeline Service provides unprecedented insight into critical crude oil pipeline flows traversing the Canada-United States border. Market participants can use this data to gain insight into U.S. crude imports by pipeline from Canada, as well as crude flows from the U.S. To learn more, or to request a free trial of Genscape's Pipeline Service, please click here.