Canadian crude oil exports to the United States are about to increase this year as additional pipeline capacity comes online and oil sands output increases, Argus reports, adding that demand for heavy crude has also been on the rise with few producers available.
Pipeline export capacity will rise by some 420,000 bpd at least, the report noted, while production of heavy crude in the oil sands improves. The largest capacity addition will come from Enbridge's Line 3 expansion, to be completed by the fourth quarter, according to the company.
The expansion project will boost the pipeline's capacity from 390,000 bpd to 760,000 bpd and will enable Enbridge to accept more requests for capacity reservations. Now, per the Argus report, the company has to reject 52 percent of requests for space on the pipeline.
Because of the pipeline capacity shortage, rising Canadian exports of crude to the United States have had to be transported by rail. Pipeline issues have also recently led to a cooling in U.S.-Canadian relations after Michigan Governor Gretchen Whitmer ordered Enbridge's Line 5 shut down, claiming it posed an environmental risk. Enbridge refused to shut down the pipeline, which carries 540,000 bpd of crude oil and natural gas liquids daily.
"This case raises concerns regarding the efficacy of the historic framework upon which the U.S.-Canada relationship has been successfully managed for generations," Ottawa said in a statement ahead of Gov. Whitmer's deadline for shutting down the pipeline. The move by the Michigan Governor "threatens to undermine important aspects of that cooperative international relationship," the statement also said.
This is one reason why the expansion of Line 3 will be welcome by Canadian oil producers, as will the 50,000-bpd expansion of another one of Enbridge's pipelines—the Express pipeline from Hardisty to Casper, Wyoming. According to the Argus report, Enbridge expects completion of the expansion project in the current quarter.
By Irina Slav for Oilprice.com
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