North American Crude Pipeline Industry to Hold Steady in 2016 Against Continuing Low Oil Prices

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Researched by Industrial Info Resources (Sugar Land, Texas)--The year 2016 is shaping up to be a big one for the "stranded" North American oil plays: the Bakken Shale and the Alberta Oil Sands. Several megaprojects are expected to begin work or to be completed, as well as multiple "producer access" projects, i.e. pipeline projects which would directly impact producers' access to the North American Pipeline Network. While Texas, unsurprisingly, has more crude oil pipeline projects and spending, Alberta dwarfs the Lone Star state's project numbers and project investment.

Overall, the number of projects with kickoffs and completions in 2015 is drastically lower than the projections for 2016, according to Industrial Info's data. However, these numbers include several megaprojects that have been in permitting limbo for years, namely the Trans Mountain Expansion (TMEP) project by Kinder Morgan Incorporated (NYSE:KMI) (Houston) and the Line 3 Replacement project by Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta). Removing these megaprojects, whose fates are uncertain, the number of projects and investment value in North American crude oil pipelines are roughly even, at 117 projects worth $12.2 billion in 2015, and 133 projects worth $12.6 billion in 2016.

The region to look at as a special growth area next year would be the Midwest, specifically Minnesota and the Dakotas. Many projects in these areas are focused on giving producers better access to the North American Pipeline Network to get their product south to the Gulf Coast. These states represent a higher investment value than Texas, or indeed the entire Southwest region, with projects worth up to $5 billion set to kick-off and/or be completed in 2016. All told, the U.S. is looking at more than 4 million barrels per day (BBL/d) of new pipeline capacity kicking off and/or being completed in 2016.

North of the border, the aforementioned megaprojects boost Western Canada's project number and spending amounts to 63 and $10.7 billion, respectively. Removing these projects, there are still 28 projects representing more than $2 billion in investment. By comparison, Texas has only 21 projects representing about $1.5 billion.

The remaining projects in Western Canada are exclusively in Alberta, mainly expanding the intra-province pipeline network, bringing on-ramps to the North American Pipeline Network closer to producers, and giving them access to markets for half to one-third the price of rail. This new access may alleviate some of the pressure on producers, driven by the current price of crude oil, by reducing shipping costs, as well as increasing profitability for future drilling and production in the area if/when the price of crude oil bounces back.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.