Canadian oil sloshes in
Houston Chronicle ^ | 3/6/2006 | LYNN J. COOK
Canada has been showered with attention for its oil sands — deposits
of thick, sludgy crude in remote parts of northern Alberta — but until
now most of that oil has flowed only as far south as Chicago.
This week, crude spun out of Canada's oil sands came all the way to
this flat Oklahoma prairie town that's known as the oil pipeline
capital of the world.
Enbridge, a Calgary-based oil delivery and storage company, opened the
taps to its Spearhead Pipeline, a 650-mile stretch of steel from
Chicago to Cushing, and the first western Canada crude sloshed into
the company's mammoth Cushing terminal early Thursday.
The moment was more than two years in the making for Enbridge, which
is rapidly expanding its Cushing terminal with new storage tanks that
will add another 3.5 million barrels of oil space to the
10.3-million-barrel capacity it already has.
Enbridge completed four new 575,000-barrel storage tanks in 2005.
While oil flowing through an underground pipeline may seem mundane,
the $190 million Spearhead project has special significance.
That's because Enbridge reversed the flow of the Spearhead pipeline,
which is also something of a reversal of fortunes.
For years the pipe, which used to be owned by BP, carried Gulf of
Mexico crude to northern markets that needed the oil. But as the Gulf
slowly but surely plays out, and Canada's oil sands production picks
up steam, the crude is flowing in a different direction.
It's a sign of the times. Canada, which is already the biggest
exporter of oil to the U.S., outranking Mexico, Venezuela and Saudi
Arabia, will likely double its oil production in the next decade,
thanks to production from the oil sands.
"For us pipeliners, seeing this fresh steel and new tanks in the
ground really gets the blood flowing," said Richard Bird, Enbridge's
vice president of li- quids pipelines.
Energy analyst George Morris of Petrie Parkman called 2005 and 2006
the years of the pipeline, saying they are the key pieces of the oil
sands puzzle.
"The big issue is where you're going with the crude," Morris said.
"It's pipelines. It's refining. How is the market being locked up?"
On the same day Enbridge delivered the first oil sands crude to
Cushing, Chevron announced it had acquired five oil leases in Alberta
containing 7.5 billion barrels of crude.
Other energy players, from Exxon Mobil and Royal Dutch Shell to Suncor
and China's state-owned Sinopec, are rushing to expand operations in
the oil sands. But it was the refiners that contracted for space in
Enbridge's Spearhead system, including ConocoPhillips and Frontier
Oil.
Exxon Mobil is also working on a pipeline reversal that would bring
Canadian crude down to Gulf Coast refiners instead of flowing Gulf oil
north to Midwestern markets.
Rick Sandahl, Enbridge vice president of market development, said more
pipeline reversals between Canada and the Gulf Coast are inevitable.
"Without question. If you have existing pipes that are not fully
utilitized, then it's making more and more sense," he said.
Bird said the Spearhead line, which has an initial capacity to
transport 125,000 barrels of oil a day, can be expanded easily.
Ratcheting up the pumping power in the existing pipe could boost
capacity to 190,000 barrels a day. Enbridge also has second-stage
plans to loop the pipe — building another line alongside the existing
one — that would add another 100,000 barrels a day.
Greg Stringham, of the Canadian Association of Petroleum Producers,
said the oil sands' potential to supply not only the U.S. but also
Asia is enormous.
Once crude production from the oil sands hit 1 million barrels a day
in 2004, the world started to take Canada seriously, he said.
"With the exception of Saudi Arabia and the Russians — if they get
their act together — we're the only one to grow when everyone else is
flat or declining," he said.
--
"The president and I cannot prevent certain politicians from losing
their memory, or their backbone, but we're not going to sit by and
let them rewrite history." -- ***** Cheney 11/16/2005
"War is God's way of teaching Americans geography" -- Ambrose Bierce
"America is a vast conspiracy to make you happy." -- John Updike
"Long term commitment in relationships is only necessary because it takes
so damn long to raise children. Marriage may well be some kind of trick
to keep the males around beyond sexual satiation." -- Captain Compassion
"Progress is the increasing control of the environment by life.
--Will Durant
Joseph R. Darancette
daranc@NOSPAMverizon.net
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