Super-sized new pipe is being laid in Alberta oil’s lone route west across the Rocky Mountains to prepare for years of staged export increases onto world energy markets.

Gordon Jaremko (The Edmonton Journal - November 03 2007)

“It’s a fundamental advantage we have,” Kinder Morgan Canada president Ian Anderson said in explaining the scale of a project that has startled visitors to Jasper National Park since construction began in late summer.

“We’re able to expand incrementally as new production comes on incrementally,” Anderson said, as crews on the $443-million addition to Trans Mountain Pipe Line hit a fall peak of 490 workers and 70 managers.

North American Construction Group is building the TMX anchor loop project for Kinder Morgan. The project will add capacity to Trans Mountain Pipe Line between Edmonton and Vancouver. It is 159 kms of new 91-centimetre diameter pipe through Jasper and Mt. Robson parks.

After Edmonton-based contractor North American Construction Group finishes laying jumbo pipe, 36 inches (91 centimetres) in diameter, across 159 kilometres of Jasper National Park and British Columbia’s Mount Robson Park next November, oil deliveries will rise 15 per cent to 300,000 barrels per day.

The increase will only begin to use the route’s newly built-in capacity to keep on expanding without further construction in the most environmentally touchy legs of the 1,150-kilometre corridor from Edmonton across the Continental Divide to Vancouver.

Kinder Morgan “up-sized” the mountain pipe to support eventual increases to 1.1 million barrels per day, with backing by the Canadian Association of Petroleum Producers and approval from the National Energy Board.

Legal rights to lay new pipe across the Rockies date back to 1951 federal legislation that chartered the line and created its right-of-way. But Kinder Morgan did not want to press its luck by seeking mountain construction permits more than once, Anderson indicated.

“There’s a recognition of the pristine nature of the park. We wanted to minimize the amount of construction that would take place,” he said.

“The problem of getting back into the park was not something we wanted to count on solving again.”

The TMX Project, short for Trans Mountain expansion, started with $225 million in construction last winter of 10 new pumping stations outside the Rockies. TMX is in high demand as a route for transporting shares in growing Alberta oilsands production to alternative markets outside traditional ones in central Canada and the middle-western U.S.

Deliveries via Trans Mountain, a southbound spur line and a tanker dock in Vancouver harbour go to southwestern B.C., the northwestern U.S., California and overseas to China and Japan.

In addition to raising sales volumes, increased use of Trans Mountain is expected to improve overall prices for Alberta oil by reducing discounts on oversupplied eastern markets.

The first new shipping capacity on Trans Mountain, a 16-per-cent increase to 260,000 barrels daily, has been full since it opened last spring, Anderson said.

He predicted the next new space for an additional 40,000 barrels daily will also fill up immediately, triggering another TMX phase.

The next step will increase delivery capacity to a total of 400,000 barrels daily by installing nearly 500 kilometres of jumbo pipe on both sides of the Rocky Mountains crossing. Construction is planned between Edmonton and Hinton, and between the Mount Robson region and Kamloops, B.C.

Commercial support for the next addition is being negotiated with prospective shippers and the project could be ready to advance into regulatory and construction stages in about six months, Anderson said.

Then comes a further expansion to increase use of the current Trans Mountain right-of-way to full potential. Large-diameter pipe will be laid between Kamloops and Vancouver to increase deliveries further to 700,000 barrels daily.

The “looping” or twinning projects initially replace Trans Mountain’s old pipe, 24 inches (61 centimetres) in diameter. But the smaller pipe lies dormant, kept in condition for further use, rather than being dug up and scrapped.

The expansion program calls for the old pipe to be eventually reopened exclusively for westbound shipments of refined products from Edmonton, Kinder Morgan external relations director Philippe Reicher said.

The firm boasts delivering the widest range of oil grades carried by any single pipeline in the world, from light gasoline to heavy crude thinned out just enough to flow. A technique known as “batching” makes the pipe transport separate cargoes in liquid units arranged like railway tank cars.

The mountain crossing now under construction is also being made big enough to support a further, final step in the long-range expansion program.

Kinder Morgan’s agenda includes TMX North. For an estimated $2 billion to $3 billion, the firm aims to build a 400,000-barrels-daily branch line from a point west of Mount Robson across the Prince George region of central B.C. to a proposed new supertanker port on the Pacific coast at Kitimat.

The projects will proceed as oil shippers step forward to buy new delivery capacity by signing transportation service contracts. Firm bookings are needed to finance construction and obtain regulatory approvals.

Kinder Morgan expects to build capacity additions on Trans Mountain’s established right-of-way at a brisk space because Alberta oil is replacing Alaskan production. After supplying northwestern U.S. refineries for more than 30 years, the Prudhoe Bay oilfield is running down due to natural depletion of its geological formations.

TMX North will take longer than other phases of the expansion program because new markets have to be developed for Alberta oil to make construction possible, Anderson indicated.

Attempts by pipeline rival Enbridge Inc. and a Chinese oil marketing partner to obtain industry support for a $4-billion, all-new oilsands route from Edmonton to Kitimat ran into snags. Construction target dates are postponed.

Trans Mountain is not counting on building its entry in the northern Pacific coast pipeline race in less than six years, Anderson said.

But there are encouraging signs that Alberta oil is winning toeholds on remote markets served by ocean tankers that will be needed to justify building TMX North to a Kitimat port, Anderson said.

Trans Mountain’s Vancouver loading dock, Westridge Marine Terminial is filling up three to five ships per month, he reported. The tankers take cargoes of up to 500,000 barrels of oil.

Alberta oil’s ocean voyages are gradually fanning out across the world to reach a wide range of destinations from California coast refineries to ports in Japan, Korea and China, he said.