The Energy East pipeline will be needed to meet new demand for diluted bitumen transport by 2020, according to a mid-February memo to Natural Resources Minister Jim Carr that contradicts a Finance Canada assessment that found no need for new pipelines before 2025.
“Absent this capacity, more oil will be shipped by rail, and some production will be restricted,” said the NRCan briefing obtained by CBC.
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“The low price environment has led to oil production forecasts being revised downward, meaning that sufficient capacity (from both rail and pipelines) is projected to exist to transport oil until at least 2025,” said the heavily-redacted Finance Canada missive, reported last week by the Canadian Press.
The NRCan analysis put Canada’s daily oil production at 4.9 million barrels by 2020, up from 3.9 million in 2014, and pointed to Energy East—which TransCanada proposes to bring into service by 2020 or 2021—as the most suitable pipeline to carry the new volume. “TransCanada’s proposed Energy East project would provide access to new markets in Europe and India, but would also strengthen Canada’s long-term energy security by providing eastern Canadian refiners with reliable access to domestic crude supplies.”
University of Alberta energy and environment economist Andrew Leach told CBC he was inclined to believe NRCan’s calculations over Finance’s. NRCan “is traditionally the department where you have the most expertise in studying the ins and outs or nuts and bolts of crude oil markets,” he said. “So it wouldn’t be surprising for them to have more detail on the specific attributes of the market.”
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