By Nia Williams
CALGARY, Alberta, Dec 16 (Reuters) - Kinder Morgan Energy Partners LP filed an application with Canadian regulators on Monday to nearly treble the capacity of its Trans Mountain crude oil pipeline to 890,000 barrels per day.
The facilities application to the National Energy Board (NEB) is the next step in Kinder Morgan’s bid to expand the existing 300,000 bpd line that runs from Edmonton, Alberta to Vancouver, British Columbia.
The company filed preliminary plans on the C$5.4 billion ($5.10 billion) project with the NEB earlier this year.
The 715 mile (1,150 km) Trans Mountain line is the only pipeline running from Alberta’s vast oil sands to Canada’s Pacific coast and the proposed expansion has received strong support from producers keen to export their crude to international markets.
The NEB will establish a hearing schedule for a public regulatory review of the project. If approved, Kinder Morgan expects the expanded pipeline to start operating in late 2017.
Canada’s oil industry is relying on new pipelines to transport booming production out of Alberta and alleviate steep price discounts on oil sands crude. Industry groups welcomed the filing.
“The Trans Mountain project ... represents one of several transportation infrastructure projects needed to help Canadians realize full value and benefits for the resources they own,” said Greg Stringham, vice president of the Canadian Association of Petroleum Producers (CAPP).
The expanded pipeline would primarily carry heavy crude oil, the bulk of which would be loaded onto tankers at Kinder Morgan’s Vancouver marine terminal, Ian Anderson, president of Kinder Morgan Canada, told reporters on a conference call.
He expected most of the crude would be shipped to Asia and California.
Kinder Morgan said 73 percent of the proposed expansion route will follow the existing right-of-way.
The company has also recommended enhancements to marine safety procedures, including extending tug escorts and establishing moving safety zones of 500 metres or more around tankers to reduce the risk of collisions.
Anderson said the company was confident the application would satisfy the five conditions set out by British Columbia Premier Christy Clark last year, for the province to support the construction of oil pipelines.
“We are not going to prejudge the process and we are not going to prejudge the project itself,” said British Columbia environment minister Mary Polak, adding the province would likely seek intervener status in the NEB hearings.
“We are encouraged by Kinder Morgan’s willingness to work with us to satisfy those conditions but there’s still a great deal of work to be done as we go through the review process.”
Environmental groups, concerned about the impact of developing Alberta’s oil sands, have opposed plans to expand and develop Canadian export pipelines.
TransCanada Corp’s Keystone XL project still awaits U.S. presidential approval six years after it was first proposed, while Enbridge Inc’s Northern Gateway pipeline to Kitimat, BC is waiting for a preliminary regulatory decision from the NEB by month-end.
Kinder Morgan said 13 shippers had committed to take approximately 708,000 bpd of capacity on the expanded line and there was little risk of new pipeline capacity outpacing demand.
“If you look at what CAPP forecasts for production of heavy oil especially over the next decade there will be enough oil supply to fill all of these projects that are being proposed today,” Kinder’s Anderson said.
CAPP expects oil sands production to hit 4.5 million bpd by 2025, up from 1.8 million bpd in 2012.
The existing 300,000 bpd Trans Mountain pipeline is routinely oversubscribed, prompting Kinder Morgan to ration the amount of crude shippers can transport.
That pipeline apportionment contributes to crude getting bottlenecked in Alberta, resulting in Canadian heavy crude trading as much as $40 per barrel below the West Texas Intermediate benchmark last month.