Doubts cast on ability of TMX, KXL pipelines to meet demand

CALGARY The Canadian oil and gas industry will need more pipeline capacity than what is currently under development to meet even its most modest growth projections, says the Canadian Energy Pipeline Association, while acknowledging the industry needs to reposition itself to keep pace with changing attitudes.

“The debate is still very hot around the need to have more pipelines,” said CEPA president and CEO Chris Bloomer as his industry group of pipeline companies released its annual report card on pipeline spills in the country.

Bloomer said the debate about pipelines has largely moved from one focused on whether they are safer than moving on railway cars to one focused on climate change. “The industry needs to change the way it addresses the polarization,” he said.

In the past, pipeline opponents were described as NIMBYS, or people who would say “not in my backyard” to a pipeline project. Now, groups opposing pipelines are described with the new acronym NOPE — which means “not on planet Earth.”

The stakes are high for the oil and gas industry. To meet even the most modest projections for growth, Canadian oil producers will need more than the 590,000-barrels-per-day Trans Mountain Expansion project (also known as TMX), the 830,000-bpd Keystone XL pipeline (also referred to as KXL) and Enbridge’s 370,000 bpd Line 3 replacement project.

The Canadian Association of Petroleum Producers’ most recent annual forecast projects the domestic oil industry will produce 5.86 million barrels of oil per day in 2035, up from 4.6 million bpd in 2018.

That’s a more modest projection than the Canada Energy Regulator, which estimated Canadian oil production would reach 6.9 million bpd in 2040 in its base case but that could rise to 9.1 million bpd in a scenario in which oil prices rise higher than expected.

Right now, the Canadian oil industry produces more than can fit into its pipeline network. The most recent data from the Canada Energy Regulator shows that 310,000 barrels of oil per day were exported from Canada on railway cars in August, the last month for which data is available.