Alaska has shipped a tanker full of oil to South Korea (from Valdez) for the first time in a decade.
ConocoPhillips shipped the oil but said terms of the deal are confidential and that future shipments would be “primarily determined by market conditions and in part by tanker availability.“The U.S. Energy Information Agency says that while oil exports from Alaska have been allowed since 1996, there have been none since 2004. With US production continuing to boom, its output is set to exceed Saudi Arabia’s this month or next for the first time since 1991.
Meanwhile to the south Canada’s National Energy Board (NEB) has approved the construction of the Northern Gateway pipeline from Alberta to Kitimat. Yet the project has failed to garner the support of key First Nations along the route and faces implacable environmentalist opposition. The new Premier of Alberta has expressed his doubts that Kitimat would ever embrace an oil pipeline terminus. The president of the Northern Gateway pipeline says it’s unlikely the project will start up in 2018 as the company seeks to win over B.C. First Nations groups, many of which remain adamantly opposed to the $7.9-billion project.
If built, Northern Gateway would ship 525,000 barrels per day of diluted oilsands crude from the Edmonton area to Kitimat, B.C., where the oil would be loaded on tankers and shipped to Asia. A smaller parallel line would ship condensate, an oilsands thinning agent, in the opposite direction.
The other large oil project is Kinder Morgan’s Trans Mountain expansion project. The company filed its application with the NEB on December 16, 2013. Filing of the application will initiate a regulatory review of the proposed expansion facilities. If the regulatory application process is successful, construction of the new pipeline could begin as early as 2015/2016. The expanded pipeline would be operational in late 2017. The project would increase capacity from 300,000 to 890,000 barrels per day (bpd) on the line that runs from Edmonton to Vancouver. Projected capital cost $5.4 billion.
It is beginning to make less and less sense that Alaska ships oil to the lower 48 states, as the oil production has jumped there due to new discoveries and technologies. Exporting Alaska crude makes economic sense and will likely increase. There is a world market for oil.
It remains to be seen whether the proponents for the two big oil pipelines will succeed in the next 5 years in building their BC projects. In the interim, is there a business case to ship oil by rail to Prince Rupert, then on tanker to Asia?