Thursday, July 25, 2013

Keystone is not the only Canadian Pipline

Enbridge Pipeline
On Wednesday, July 17th 2013 the Minnesota Public Utilities Commission unanimously approved plans by Enbridge Energy to boost the capacity of the United States portion of their Line 67 (formerly the Alberta Clipper Pipeline) in Minnesota. Enbridge still requires a Presidential Permit to expand their oil shipment across the U.S.-Canadian border and the US State Department is conducting an environmental review of the expansion plan potentially delaying or stalling the pipeline project. This request differs from the Keystone XL request because the pipeline in question is already in place and the request is to increase the capacity by upgrading the pumping stations.

Enbridge intends to spend $40 million to upgrade three Minnesota pumping stations, at Viking, Clearbrook and Deer River, allowing them to push 27 % more oil through the 36-inch diameter Line 67 pipeline, which runs 670 miles from Hardisty, Alberta, to Superior, Wisconsin. With these improvements, the pipeline line will be able to carry up to 570,000 barrels of oil per day. The Minnesota project is part a larger plan by Enbridge to upgrade pipelines in the United States and Canada to ship more Canadian oil from the Alberta oil sands to the Midwest and beyond. The Canadian Association of Petroleum Producers has projected that Canadian oil output will more than double by 2030 to 6.7 million barrels per day, with most of the increase anticipated to be from the Alberta oil sands.

This is the first phase of a two phase capacity expansion for Line 67. Enbridge is planning to ultimately expand the pumping and storage of Line 67 to 800,000 barrels per day, from the current planned increase to 570,000 barrels per day. When the pipeline was initially built as the Alberta Clipper Pipeline in 2010 it was built with the 36 inch diameter pipe that could be expanded with the additions of pumping stations to someday carry the 800,000 barrels per day. Enbridge received approval to proceed with the construction of modifications for the Canadian portion of the project in February 2013 and construction of the improvements in Canada is anticipated to begin this summer.

The Enbridge Line 67 has received less publicity than the Keystone XL Pipeline, but it, too, is controversial to the environmental community. Most of the environmental controversy for this pipeline is simply the further development of the Canadian Alberta Oil Sands. Environmentalists believe that because it takes more energy to develop and process oil sands they will increase the rate of global warming. The Canadian oil sands have been known for decades, but until oil prices rose and technology improved these oil deposits were too expensive to exploit beyond the limited scope of surface mining which could reach only about 8% of the oil sands. Advances in technology in both oil sand extraction and refining techniques and rising oil prices altered the economics and have made the in-situ extraction of oil sand possible. Using Steam Assisted Gravity Drainage (SAGD) combined with horizontal drilling has allowed for in-situ extraction of the oil. These advances in extraction techniques have quadrupled recoverable oil reserves and moved Canada into second place in proved world oil reserves, it requires more energy to produce the oil and increases the carbon footprint of the crude as compared to oil from the Middle East or Brazil.

All current methods of mining and processing the Canadian oil sands increases the CO2 released in every gallon of gas adding to man’s carbon footprint; however Alberta, which contains the vast oil sands deposits, has committed over $1.2 billion to two carbon capture and storage, CCS, projects meant to capture, transport, and store carbon dioxide usually emitted during the oil sands production process. If these projects are completed and successful, they will reduce the carbon footprint of the Canadian oil sands to some extent.

The first project will be built by Shell Oil and it will capture one million metric tons of CO2 from the Scotford upgrader, where oil sands are processed. The Scotford upgrader processes 255,000 barrels per day of diluted bitumen. The CCS project will capture the CO2 from Shell’s oil sands mines, pipe it 50 miles north to injection wells, and then store it more than a mile underground. The Shell project is anticipated to cost about $1.35 billion 60% of which will be paid for by the government. The other CCS project is still in the preliminary planning stage and is called the Alberta Carbon Trunk Line. This project is being led by Enhance Energy Inc. and would take one million metric tons per year of CO2 produced by refineries outside of Edmonton and ship it through a 150 mile pipeline to mature oilfields in south-central Alberta where it would be used for enhanced oil recovery. The costs of this project are not available, but the government has awarded the project $455 million. The two million metric tons of carbon these projects are expected to capture are a tiny fraction of the almost 32 billion metric tons of carbon dioxide released each year from the burning of fossil fuels.

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