Is Canada Diversifying Energy Trade Routes?

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Companies behind various efforts to build out the Canadian midstream segment are making strides. It's unclear if that's enough to support a move away from U.S. trade.

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CNR, South Bow Making Midstream Headway

Canada may be making good on its efforts to expand its trade potential after both Canadian Natural Resources and South Bow announced midstream developments in their respective earnings reports.

Canadian Prime Minister Mark Carney, since taking office last year, has worked to diversify trade networks in response to ongoing tariff threats from U.S. President Donald Trump. Carney has brokered new agreements with both China and the European Union, while making good on efforts to establish the country as an energy superpower.

According to Industrial Info Resources data, few new formal developments are in the works in pipelines that can deliver crude oil. Canadian energy company Enbridge is planning an optimization program on Line 26 of the broader Canadian Mainline, which could accommodate another 250,000 barrels per day (bpd).

Also dubbed the Bakken Expansion Project, Line 26 runs from the North Dakota border to a terminal in Saskatchewan, before connecting to the Mainline system in Manitoba. Industrial Info Resources offers more information on this in its Global Market Intelligence (GMI) Pipeline Database, where readers can find details in a pipeline profile.

Further developments could emerge on a network that would support more crude oil exports out of British Columbia. Right now, the Trans Mountain Pipeline, which saw its capacity double to 890,000 bpd through recent expansions, is the only network that can deliver Canadian crude oil outside of North America. Readers can learn more in a pipeline profile.

Canada is the top crude oil exporter to the U.S. economy by far, catering to a refinery appetite for heavier crude oil slates. U.S. refiner PBF Energy said in a quarterly report from July that imports were limited by the war in Iran, though recent data show a surge in imports.

U.S. federal data show imports of Canadian crude averaged 4.2 million bpd for the week ending July 31, an increase of 595,000 bpd from the prior week and representing about 60% of total imports. But Canada is bent on diversity.

By the Numbers

• 595,000 bpd increase in U.S. imports of Canadian crude from last week
• 236 miles of new 36-inch-diameter pipeline could influence those levels

A Midstream Scramble

On Thursday, Scott Stauth, the president of Canadian Natural Resources, praised a recent memorandum of understanding brokered between the federal government, the provincial government of Alberta and the Oil Sands Alliance to pursue "additional egress opportunities," while at the same time working to cut greenhouse gas emissions from the sector.

A new artery to British Columbia would be a joint effort from the operators of Trans Mountain and Pembina Pipeline Corporation, and it largely would follow the path of the existing Trans Mountain network.

Elsewhere, in what could be seen as a counter to Prime Minister Carney's trade strategy, Alberta-based South Bow Corporation said the U.S. segment of the Keystone Pipeline System delivered 800,000 bpd during the second quarter.

During its open season period, it also secured 20-year binding commitments from nine different customers for a total of 465,000 bpd in transport from Hardisty, Alberta, to various U.S. delivery points.

Prairie Connector would include the construction of 236 miles of new 36-inch-diameter pipeline. There are about 93 miles of leftover pipeline and two pump stations available as well, presumably from the Keystone XL artery, which never made it across the U.S.-Canada border. Readers can learn more from a pipeline profile.

South Bow is targeting a final investment decision on the pipeline by the middle of next year. It still needs government permits, assurances about "permit durability," cost estimates and a range of other factors before it can reach that step.

Total exports of crude oil, refined petroleum products, natural gas and natural gas exports were valued at US$114 billion last year, accounting for 20.2% of Canada's total goods exported globally.

Key Takeaways

• Canada's midstream sector is expanding across North America
• The nation's prime minister wants to see Canada established as an energy superpower

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).