Enbridge Looks to Raise Canada’s Oil Flows to U.S. via New Pipeline

Rising Canadian oil production and continued demand for more shipping capacity at the key U.S. refining hubs have prompted Canada’s pipeline giant Enbridge to test interest from potential shippers for a new pipeline in Illinois linked to the Mainline system. Enbridge is considering raising the crude shipment capacity from Canada to the United States via the pipeline that could boost oil flows by 200,000 barrels per day (bpd). Enbridge and its partner Energy Transfer are gauging potential shippers’ interest in an open season until mid-July for a proposed new link, the Southern Illinois Connector, Enbridge has told Bloomberg in response to questions. Southern Illinois Connector would entail reconfiguring and upgrading existing systems and building a new segment.

The pipeline is expected to receive Canadian crude from Enbridge’s Mainline system and connect to Energy Transfer’s crude oil Pipeline at Patoka, sources with knowledge of the plans told Bloomberg. The open season for the Southern Illinois Connector is in response to increased demand for additional capacity from Illinois to the U.S. Gulf Coast, Enbridge said. Related: Lula’s Brazil Doubles Down on Oil and Cash Enbridge operates the Mainline system, moving more than 3 million barrels a day of crude oil and liquids from Western Canada to the demand markets in the United States. Overall, Enbridge moves 30% of the crude oil produced in North America, for 65% of all U.S.-bound Canadian oil exports, 40% of U.S.

oil imports, and about 25% of North American oil exports. More shipping capacity out of Canada would be welcome news for producers who are raising output from the oil sands to record highs and will continue to smash records this decade. Despite lower oil prices, Canada’s oil sands production is expected to reach an annual all-time high of 3.5 million barrels per day (bpd) this year, thanks to optimization and efficiency at producing assets, S&P Global Commodity Insights said in its latest 10-year outlook earlier this week. Oil sands volumes are expected to top 3.9 million bpd by 2030, per S&P Global Commodity Insights. Efficiencies, optimization, and favorable economics are expected to drive production growth at Canada’s oil sands, S&P Global Commodity Insights says.

Despite market volatility, Canada’s energy producers have maintained spending and production guidance so far this year, showing more resilience compared to some of their counterparts in the United States. The potential increase in Canada’s oil flows to the U.S. via the new Illinois pipeline proposed by Enbridge and Energy Transfer would accommodate rising Canadian oil production and meet industry demand at the U.S. refining centers. Story Continues Canada’s oil-producing province of Alberta is also seeking additional shipping capacity within Canada to boost Canadian oil exports to customers outside the United States.

Alberta could receive, within weeks, a proposal from a private company for a new pipeline to British Columbia’s northwest coast, Alberta Premier Danielle Smith told Bloomberg News in an interview earlier this week. Earlier this month, Smith said that Alberta is working to engage private backers for a new pipeline to ship about 1 million barrels per day (bpd) of crude from Canada’s oil-producing province to British Columbia. The pipeline would run from the oil sands in Alberta to the Port of Prince Rupert on British Columbia’s northwest coast, and to international markets afterwards, according to the plans of the province. Amid soured relations with its top trading partner under U.S. President Donald Trump, Canadian policymakers at both the federal and provincial levels have started to realize they may have too hastily scrapped over the past decade Alberta-to-coast pipeline projects that could have diversified Canada’s oil and gas exports.

The expanded Trans Mountain route is currently the only pipeline shipping Alberta’s landlocked crude for exports on tankers from the West Coast. Alberta is also betting on a restart of its dialogue with the federal government after Canadian Prime Minister Mark Carney pledged that the federal authorities would work to fast-track major projects to make Canada an energy superpower. By Tsvetana Paraskova for Oilprice.com More Top Reads From Oilprice.com Canada’s Oil Sands Production Set for Record High in 2025 The Permian Basin is Fueling America's Electric Future U.S. Sits on Billions of Untapped Oil Barrels Read this article on OilPrice.com View Comments