Customers submitted binding bids for 660,000 barrels per day
The owner of the Trans Mountain pipeline, which ships crude oil from Edmonton to the West Coast, has made the decision to almost triple its capacity after receiving strong orders from shippers.
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) says it received binding commitments through the recently concluded open season from a diverse group of existing and new shippers for 660,000 barrels per day (bpd). All commitments are for a 20-year term. When completed, the $5 billion proposed expansion will increase capacity on Trans Mountain from the existing capacity of 300,000 bpd to 850,000 bpd.
“We are extremely pleased with the strong commercial support that we received through the open season, which reinforces the appeal of our project and our approach,” said Ian Anderson, president of Kinder Morgan Canada. ”This strong commercial support shows the market’s enthusiasm for expanding market access for Canadian crude by expanding an existing system.”
Enbridge’s proposal to build a new pipeline from Bruderheim, AB through the BC interior to a proposed new marine terminal in Kitimat has been getting a rough ride at public hearings convened by the National Energy Board, which reviews pipeline proposals. Opponents to the Northern Gateway project argue a spill could have devastating environmental consequences for sensitive salmon spawning grounds and forest ecosystems.
The 55-year old Trans Mountain pipeline carries heavy and light crude oil, gasoline and diesel 1,150 kilometres from Edmonton through the BC interior to terminals and refineries in the Vancouver area and Washington State, as well as to other markets such as California, the U.S. Gulf Coast and overseas through the Westridge marine terminal located in Burnaby, BC.
The involvement of aggressive environmental groups in the Northern Gateway review process spurred the Canadian government to pledge to streamline the review process. The Stephen Harper government announced in its March budget that it would take steps to speed up the environmental review process. Environment Minister Joe Oliver is scheduled to announce changes to the process today.
Anderson says Kinder Morgan will file it application, which will initiate a regulatory review, with the National Energy Board in 2014.
“If our application is approved, construction is currently forecast to commence in 2016 with the proposed project operating by 2017,” he said.
Like Enbridge, Kinder Morgan will engage local communities.
“We are still early in the engagement process of the project,” Anderson said. “We share respectful, open relationships with many communities and organizations interested in our business.”
Anderson says the company is committed to an 18 to 24 month inclusive, extensive and thorough engagement on all aspects of the project with local communities along the proposed route and marine corridor, including First Nations and Aboriginal groups, environmental organizations and all other interested parties.
“We will also consider providing financial support to local communities for environmental initiatives. We have been planning for this day for many years and we are keen to start in depth engagement this summer,” said Anderson.
The preliminary scope of the proposed project includes:
- Twinning the existing pipeline within the existing right-of-way, where possible.
- Adding new pump stations along the route.
- Increasing the number of storage tanks at existing facilities.
- Expanding the Westridge Marine Terminal.
The company says it will conduct traditional land use and environmental and socio-economic studies, and undertake detailed engineering and design studies.
Preceding a facilities application, the company will file a commercial tolling application to review the proposed commercial structure for the expansion. This filing, which is anticipated in summer 2012, will seek National Energy Board approval on how the company will charge its customers for transporting their product through the proposed expanded pipeline.
The Trans Mountain pipeline supplies about 90 percent of the gasoline used in the interior and south coast of British Columbia. Kinder Morgan owns an interest in or operates approximately 29,000 miles of pipelines and 180 terminals across North America.