Not enough bitumen production to support both Northern Gateway and Keystone XL consultant says

Editor Northwest Coast Energy News 

Energy

Bloomberg news reports that a Calgary based energy research company believes Enbridge's Oil Sands Project Is Years Early


Enbridge Inc., Canada's largest pipeline operator, wouldn't need to build the Northern Gateway project to export Alberta's oil-sands crude for almost a decade if TransCanada Corp.'s Keystone XL is approved this year, according to IHS CERA, an energy research company.

The 732-mile (1,177-kilometer) Northern Gateway pipeline would pump 525,000 barrels a day from near Edmonton, Alberta, to the port of Kitimat, British Columbia, where crude would be loaded on tankers bound for Asia. The line, scheduled to start in 2017, would reduce Canadian dependence on U.S. markets and compete with the Keystone XL, designed to pipe 700,000 barrels a day to refineries in Texas along the Gulf of Mexico by 2013.

Jackie Forrest, a director of global oil at IHS CERA, said there won't be enough oil sands production to support Northern Gateway's launch even if, as she expects, Keystone XL approval helps the output double in 10 years to 3 million barrels a day.

The Bloomberg article goes on to quote one analyst who believes the Northern Gateway fight will get a lower profile than the Keystone XL.

Northern Gateway faces opposition from environmentalists and Indian groups because it passes through the Great Bear Rainforest and raises the risk of supertanker oil spills in the Douglas Channel. However, the Canada-only route may make the project less prominent than Keystone XL, which has drawn protests from celebrities such as Daryl Hannah and Margot Kidder, who played Lois Lane in several Superman movies.

 "Northern Gateway would be an all-Canadian fight and thus perhaps could be less sensational and muscular, think Canadian Football League vs. U.S. NFL, but nonetheless might get very contentious," Judith Dwarkin, chief energy economist for ITG Investment Research, wrote in an e-mail from Calgary.

Approval of the Keystone XL may not be the slam dunk that some in  the Calgary oil patch believe. As Konrad Yababuski reports in The Globe and Mail in Keystone XL: More about the politics than the petroleum

Proponents of the TransCanada Corp. project, which would double the amount of Alberta crude flowing south, now fear that President Barack Obama will give in to pressure from the base of the Democratic Party to nix the pipeline.

With Mr. Obama's approval rating sliding to a record low - leading more than half of Americans to think for the first time that he will be a one-term President - the White House needs to bring every stray Democrat it can find back into the fold before the 2012 election.

The progressive wing of the Democratic Party has been feeling particularly unloved by this White House. Killing the Keystone XL project would be a powerful way for the administration to show its renewed affection.

Which means of course if President Barack Obama does kill Keystone XL to keep his base happy, there will be more than enough bitumen sands for the Northern Gateway pipeline.

Editor's note:  Disclosure.  I have always liked the CFL game, with three downs and the bigger field over the NFL, so the analogy is probably apt in describing the contentious Northern Gateway debate, a more wide open and interesting struggle.   

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