Catching Up On Enbridge; The Diluent Story Is Fascinating

I was out of the loop earlier this week due to traveling. Catching up on Enbridge, some recent stories:

Enbridge updates regional oil sands system status, press release. 

The release on Line 37, which connects the Long Lake Oil sands project to Enbridge's Cheecham Terminal, is believed to have resulted from ground movement on the right-of-way as a result of recent unprecedented precipitation levels which exceeded a 1 in 100 year event. Enbridge shut down all pipelines in the area as a precaution.

The southern segment of the Athabasca Pipeline (Line 19) between Cheecham and Hardisty was subsequently returned to service on June 23rd and on June 25th, the Alberta Energy Regulator approved the restart of the Waupisoo Pipeline between Cheecham and Edmonton.

However, the Athabasca and Wood Buffalo pipelines between Fort McMurray and Cheecham and Line 37 remain shut down as Enbridge completes data gathering and engineering analysis of the lines.

Canadian pipeline operator Enbridge said it restored service to one of three major pipelines it shut down over the weekend, but was still working to repair and return to service a 100,000 barrel-per-day line that leaked crude oil.

Motley Fool on the Keystone XL:

June 25, 2013:

"In conclusion, I think betting on Keystone to be approved is pretty sound. In all likelihood the pipeline will get approved sometime going forward. In fact, it's already completed in some locations, so it's just a matter of pressing forward and finishing the job."

June 27, 2013:

"The future looks bleak for the Keystone XL. .... That casts serious doubts on TransCanada's ability to extend the major project from Canada to southern United States. However, the State Department still has a say about whether the project will go through, and their report is expected to determine whether the project would benefit America.

However, the President's speech cast serious doubts on TransCanada's ability to execute the pipeline, and that should have shareholders concerned. The pipeline extension would cost about CAD$7.6 billion, and the firm is counting on the project for major revenue expansion.

Motley Fool: a looming diluent shortage for the Canadian sands.

Canadian oil sand producers face a new challenge - a looming shortage of pipeline diluent. And the problem threatens the industry's development.

Bitumen - the sticky, tar-like substance mined from the oil sands - is too thick to flow by itself. Rather it must be blended with lighter hydrocarbons, super-light oil called condensate and other natural gas liquids, in order to be shipped by pipeline. These products are called diluent.

Costs are rising. Alberta condensate prices averaged $108/b during the first three months of 2013, up $11/b from the fourth quarter of 2012. But demand for diluent is poised to increase further for two reasons.

First is rapidly growing oil sands production. Three barrels of bitumen require one barrel of condensate to flow freely. Oil sands output is expected to double to 3.8 million b/d by 2022.

Second, oil sand players are balking at building expensive upgrade plants which convert bitumen into refinery ready oil.
Both of these factors could push the demand for diluent from 330,000 b/d today to 935,000 b/d in ten years.

Earlier this week, RBN Energy had a story on increased diluent shipments from the Eagle Ford up to Canada.  That was in my Wednesday morning news and links post.