Keeney launches XL pipe­line July 2; con­fi­dent in oil in­dus­try fu­ture

Prairie Post (East Edition) - - NEWS - By Ryan Dahlman

rdahlman@prairiepos­t.com

Oyen will be in the midst of oil in­dus­try ac­tiv­ity within the fore­see­able fu­ture.

Premier Ja­son Ken­ney was in Oyen July 3 to launch con­struc­tion on Al­berta’s por­tion of the 1,947 km Key­stone XL pipe­line.

Ac­cord­ing to the gov­ern­ment re­lease, Key­stone XL will de­liver up to 830,000 bar­rels per day of western Cana­dian crude oil from Hardisty to Steele City, Ne­braska. In turn it will go to U. S. Gulf Coast re­fin­ers. The gov­ern­ment of Al­berta has a $ 1.5 bil­lion stake in the project.

In an in­ter­view July 2 while in Brooks, Ken­ney said in an in­ter­view with Prairie Post he was ex­cited about the prospects for re­cov­ery in the oil in­dus­try, once oil in­ven­to­ries go down.

“We are op­ti­mistic be­cause we have the third largest oil re­serves in the world and we are very cap­i­tal ef­fi­cient. Tens of bil­lion of dol­lars have been taken out of up­stream ex­plo­ration and pro­duc­tion of oil around the world be­cause of the price crash due to COVID,” ex­plained Ken­ney who ex­pected the price to sig­nif­i­cantly in­crease in 12 to 18 months. “Two months ago we were selling Al­berta oil at neg­a­tive price ter­ri­tory. Thank­fully things have re­cov­ered more quickly than we ex­pected and are now more or else at sur­vival price, bump­ing around $ 40 WTI ( West Texas Intermedia­te) and $ 30 WCS ( Western Cana­dian Se­lect), our pro­duc­ers can gen­er­ally sur­vive at that price, I be­lieve that like many fore­cast­ers 12- 18 months from now there will be a sup­ply crunch, be­cause of all the money taken out of up­stream ex­plo­ration and pro­duc­tion.”

Pro­posed by TC En­ergy 12 years ago, the Key­stone XL project is sup­posed to cre­ate about 2,000 con­struc­tion work­ers hired in Al­berta over the next two years. Over­all, the project will con­trib­ute about $ 2.4 bil­lion to Canada’s GDP and will gen­er­ate more than $ 7 mil­lion in prop­erty taxes in the first year in ser­vice. It’s es­ti­mated the project will gen­er­ate $ 30 bil­lion in tax and roy­alty rev­enues. Plus it will also cre­ate other in­dus­tryre­lated jobs.

In­vest­ing in Key­stone XL is part of the more than $ 10 bil­lion in­fra­struc­ture spend­ing an­nounced as part of Al­berta’s Re­cov­ery Plan. This spend­ing in­cludes: $ 6.9 bil­lion Bud­get 2020 cap­i­tal spend­ing, $ 980 mil­lion ac­cel­er­ated for Cap­i­tal Main­te­nance and Re­newal, $ 150 mil­lion for Strate­gic Trans­porta­tion In­fra­struc­ture Pro­gram and wa­ter in­fra­struc­ture projects, $ 600 mil­lion in strate­gic in­fra­struc­ture projects, $ 500 mil­lion in mu­nic­i­pal in­fra­struc­ture and $ 1.5 bil­lion for Key­stone XL.

Key­stone XL is ex­pected to be com­plete and op­er­a­tional in 2023. Over the next three years, 269 km of pipe­line will con­structed and com­mis­sioned.

In the mean­time, Ken­ney is pos­i­tive the pipe­line will be worth the wait be­cause is pos­i­tive oil prices will come back strong. He says Al­berta is a world leader in the in­dus­try and ex­pects the com­pa­nies within the province

“Here is why we will come through: be­cause Al­berta’s ba­sis is far more cap­i­tal ef­fi­cient, although this doesn’t nec­es­sar­ily help the con­ven­tional pro­duc­ers around Brooks be­cause par­tic­u­larly around the oil­sands be­cause when they are do­ing a project, it is pro­duc­ing for 30 years. Whereas in the Texas per­me­ate, with the shale they are churn­ing and burn­ing, they have to drill a hole every year just to re­place the pro­duc­tion as those reser­voirs de­plete.

“The prices will be very strong in the mid- term, we just need to sur­vive the next 12- 18 months. We are do­ing what we can to help the in­dus­try, par­tic­u­larly these small ser­vice com­pa­nies that are the lifeblood of much of ru­ral Al­berta like Brooks. With our bil­lion- dol­lar surge pay­ing for ac­cel­er­ated well recla­ma­tion and com­ple­tion of aban­doned and or­phaned wells. We es­ti­mate that will get thou­sands of high- pay­ing blue col­lar jobs. It is a life­line to so many of those small con­trac­tors… but ul­ti­mately we are only go­ing to cap­i­tal get back in the in­dus­try whether it the con­ven­tional basin here or the oil sands up north, if the in­vestors know we have mar­ket ac­cess pipe­lines.

Ken­ney noted the im­por­tance of the July 2 Supreme Court of Canada’s de­ci­sion on re­ject­ing the chal­lenge by B. C. abo­rig­i­nal bands to halt con­struc­tion of the Trans Moun­tain pipe­line — ef­fec­tively ap­prov­ing it. Ken­ney says this was the “knock­ing down the last se­ries of ob­jec­tions.”

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