Gateway a potential blow to upgrading industry
Proposed pipeline would ship raw bitumen to Asian markets
By: By Ryan Tumilty
| Posted: Wednesday, Jan 11, 2012 06:00 am
Enbridge’s Northern Gateway pipeline will travel right through the Alberta Industrial Heartland, but the current plan doesn’t call for the bitumen coming through to be upgraded on its way.
The National Energy Board began hearings on the proposed pipeline this week. If approved the line would take diluted raw bitumen from Bruderheim all the way to Kitimat on the British Columbia coast. It would then transport the dilutent back to Bruderheim to be added to more raw bitumen.
On average the pipeline would transport 525,000 barrels of bitumen per day to the west coast, where tanker ships would take it to Asian markets.
On the way, it will cut across Sturgeon County, running just south of Bon Accord and north of Morinville, through the heartland, where several upgraders were once proposed.
Sturgeon County Mayor Don Rigney said overall he welcomes the project, but it does represent another example where Alberta will sell raw bitumen rather than upgrade it.
“We would get far more value for our resources if we were to ship refined product.”
Sturgeon was once projected to be home to four upgraders, but only one — North West Upgrading’s 50,000 barrel per day project — is currently expected to go ahead.
Rigney said he would rather have the pipeline carry raw bitumen than not have the pipeline at all, but he would like to see more effort made to encourage more upgrading in Alberta.
“I still feel strongly that we can and should put in place policies and regulations that incentivize us and result in us capturing far more value.”
Neil Shelly, executive director of the Alberta Industrial Heartland Association. said the pipeline is a mixed blessing because it does open up the area to opportunities in a whole new market.
But he echoes Rigney’s concerns that the pipeline represents more Alberta bitumen being shipped away without any upgrading.
“We definitely need to diversify the market for Alberta. Just shipping out raw bitumen, even if it is to an upgrader in China or India or wherever, does (diversify) a little bit, but it doesn’t really.”
Shelly said more upgrading and refining in Alberta would give the province a lot more options when it came to selling its products, along with all the jobs and benefits from the industry.
“What if we extract the bitumen in Alberta, turn into synthetic crude oil and then we could supply eastern Canada with the fuels they need?”
Enbridge spokesperson Paul Stanway said his company is simply meeting the demand that is here today, but if there was upgraded crude oil to sell to the world the pipeline would be able to move it there.
“At the moment it is designed to carry diluted bitumen, but that would depend on what happens in the future.”
Demand will only continue to grow for Alberta energy around the world, said Stanway and he pointed out Gateway’s output is only a small part of the three million barrels per day the Canadian Association of Petroleum Producers expects the oilsands will generate by 2020.
“The demand is such that I think everybody could have their needs met, it is just a case of what is the product that is available on the market. Right now we don’t have that upgraded product to ship anyway.”
Gateway would open Alberta energy products to new markets, beyond the United States, which Stanway said means more revenue for Alberta.
“Right now we are selling heavy oil from Alberta at a heavy discount because we only have access to essentially the one market, the United States, and because of that the product is selling at a very significant discount.”
Stanway argues if the price for Alberta oil rises, Alberta companies will have more money, which they could choose to invest in upgrading.
Alberta Energy spokesperson Bart Johnson, said the government welcomes the pipeline because it will help get Alberta product, in whatever form, to a market that is looking for it.
“The fact of the matter is, even if we refined all of it here in Alberta, it still needs to get to a market because it wouldn’t be used here.”
Johnson said Gateway, along with the Keystone XL pipeline and other proposed projects are all opportunities for the province to deliver what it has to sell.
“They are all vehicles to get our product to market. Whether it is raw bitumen or raw product we still have to get it to market.”
If approved Enbridge hopes to have the first shipments travel the pipeline in 2017.