Even without Keystone XL, U.S. set for record Canadian oil imports (updated)

Canada Energy Partners

22/01/2021 15:42

(Adds total pipeline capacity data in fifth paragraph)
    By Nia Williams and Devika  Krishna Kumar
    CALGARY/NEW YORK, Jan 22 (Reuters) - The Keystone XL
pipeline project may be dead, but the United States is still
poised to pull in record imports of Canadian oil in coming years
through other pipelines that are in the midst of expanding.
    U.S. President Joe Biden canceled Keystone XL's permit on
his first day in office Wednesday, dealing a death blow to a
long-gestating project that would have carried 830,000 barrels
per day of heavy oil sands crude from Alberta to Nebraska. 
    Environmental activists and indigenous communities hailed
the move, but traders and analysts said U.S.-Canada pipelines
will have more than enough capacity to handle increasing volumes
of crude out of Canada, the primary foreign supplier of oil to
the United States. 
    Currently, Canada exports about 3.8 million bpd to the
United States, according to U.S. Energy Department data.
Analysts expect that to rise to between 4.2 million and 4.4
million bpd over the next few years. Pipeline expansions
currently in progress will add more than 950,000 bpd of export
capacity for Canadian producers before 2025, according to Rystad
Energy. 
    Canada's Energy Regulator says there is enough capacity
currently to export more than 4 million bpd to the United
States.
    Biden's administration has set a goal of moving towards
decarbonization and reducing the country's reliance on oil and
gas and cutting harmful air pollutants. Most of the nation's
energy still comes from fossil fuels. 
    "Whatever limited benefit that Keystone was projected to
provide now has to be obviously reconsidered with the economy of
today," said Gina McCarthy, Biden's leading domestic climate
policy coordinator at the White House.
    Even without Keystone, however, the United States now relies
on Canada for more than half of its imported oil. Several of the
lines carrying that crude are in the midst of expansions.
    Enbridge Inc's  ENB.TO  Line 3 replacement project is in the
process of doubling its capacity, which will allow it to deliver
about 760,000 bpd of crude from Alberta to Superior, Wisconsin,
by the end of this year.
    Canada's government is also expanding the state-owned Trans
Mountain line by 590,000 bpd to 890,000 bpd. That line
terminates at the Port of Vancouver, where it should be able to
deliver barrels via tankers to the United States.
    Meanwhile, TC Energy received U.S. approval last year to
expand its existing Keystone 590,000-bpd line - located far from
the proposed Keystone XL - which would add an additional 170,000
bpd into the U.S. Midwest and Gulf Coast.  urn:newsml:reuters.com:*:nL3N2F13WK 
    "We will be over-piped assuming the other pipelines go ahead
on schedule," said Wood Mackenzie research director Mark
Oberstoetter. "If you add them all up, you can make the argument
KXL was not needed."
    Construction underway on Trans Mountain and Line 3 could
still be held up by environmental protests, but unlike Keystone
XL, both pipelines have cleared legal and regulatory hurdles.
 urn:newsml:reuters.com:*:nL1N2E910J urn:newsml:reuters.com:*:nL1N2HY3EW
    Oil production in western Canada will rise in 2021 to a new
record of 4.45 million bpd, RBN Energy estimates, up from 3.9
million bpd in 2020, most of which will be exported to the
United States. 
    Canada is the world's fourth-biggest crude producer, but has
been grappling for years with congestion on pipelines. That
caused a glut of oil in storage tanks in Alberta, driving prices
down, and spurring the province to impose production
curtailments to drain record inventories.
    Those curtailments were lifted in November, and production
has been rising ever since. Even as production is rising again,
pipeline companies have boosted efficiency on existing pipelines
through the use of drag-reducing agents. 
    "While the politics around KXL will continue to reverberate
for some time, the reality is that western Canada - for the
first time in recent memory - may soon reach a juncture at which
it has excess oil export capacity," Rystad Energy’s vice
president for North American shale Thomas Liles said in a note.

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U.S. imports of Canadian oil surge    https://tmsnrt.rs/2MfzjsQ
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 (Reporting by Devika Krishna Kumar in New York and Nia Williams
in Calgary; Additional reporting by Trevor Hunnicut in
Washington DC; Editing by Andrea Ricci)
 ((devika.kumar@thomsonreuters.com; +1 646 223 6059; Reuters
Messaging: devika.kumar.thomsonreuters.com@reuters.net))