Canada Tops $270 Billion in Active Oil Production, Pipeline Projects
Industrial Info is tracking more than $231 billion in active Oil & Gas Production projects in Canada, including more than $33 billion worth that are set to begin construction before the end of the year. Industrial Info also is tracking more than $40 billion in active Pipeline projects in Canada, including about $16 billion worth that are set to begin construction before the end of the year.
Many of these projects are in their planning stages, where plenty of factors still could increase, decrease or totally eliminate the expected spending. But among the production projects scheduled to kick off are two in British Columbia:
- Canadian Natural Resources Limited's third-train addition to the West Stoddart Sour Natural Gas Processing Plant near Fort Saint John, which is expected to produce 7,500 barrels per day (BBL/d) of natural gas liquids (NGL)
- ConocoPhillips' Blueberry Natural Gas Processing Plant in Fort Nelson, which is expected to produce 3,000 BBL/d of mixed natural gas liquids (NGL)
British Columbia also is home to two pipeline projects set to kick off before the end of the year:
- Enbridge Incorporated's 525-mile segment of the Westcoast Connector Pipeline Project, which would transport up to 4.2 billion cubic feet per day of natural gas from near Fort Saint John to a planned LNG liquefaction facility
- TransCanada Corporation's 161-mile segment of the Merrick Mainline Pipeline Project, which would transport up to 1.9 billion cubic feet per day of natural gas from near Dawson Creek to a station near Summit Lake
While pipelines are TransCanada's main business, the company also has a few power projects in the works. They arre advancing C$2 billion ($1.6 billion) of power projects, including the 900-megawatt Napanee gas-fired plant in Ontario. Construction on Napanee continues and is expected to be placed into service in 2018. The combined-cycle plant will use two combustion turbines and a steam turbine to generate 900 MW.
Construction on the natural gas-fired, combined-cycle power plant began in early 2015 and is expected to be wrapped up in the fourth quarter. Matrix North American Construction Limited (Burlington, Ontario) is providing engineering, procurement and construction on the $1.2 billion project.
While most Canada LNG projects are planned for British Columbia in the western part of the country, a few are taking aim at the European market by being planned in Nova Scotia, on the Atlantic Ocean. Among these is Magnolia LNG LLC's (Houston, Texas) planned LNG liquefaction and export facility near Port Hawkesbury. The facility would be constructed on a partly completed LNG import and regasification facility owned by Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas). The facility would have two 4 million-ton-per-year liquefaction trains. Some of the gas would be sourced from the Marcellus Shale in the U.S. Construction would take an estimated four years to complete once started.
Stantec is serving as an environmental permitting consultant on Royal Dutch Shell plc's (NYSE:RDS.A) (The Hague, Netherlands) proposed, $25 billion LNG Canada plant at Kitimat, British Columbia, which is designed to produce as much as 12 million metric tonnes per year of liquefied natural gas (LNG). This project and a proposed, $15 billion second phase that would double capacity by 2025 account for virtually all of the Oil & Gas Production spending associated with Stantec.
If built, LNG Canada would be supplied with 1.7 billion cubic feet per day of natural gas by TransCanada Corporation's (NYSE:TRP) (Calgary, Alberta) Coastal GasLink, a 670-kilometer pipeline. Stantec would perform design-engineering services for several compressor stations on Coastal GasLink, including:
$250 million station in Fraser Lake, British Columbia
$50 million station in Dawson Creek, British Columbia
$50 million station in Tumbler Ridge, British Columbia
$50 million station in Houston, British Columbia
Canada Oil Production
Not surprisingly, about 85% of the Canadian Oil & Gas Production Industry’s $231 billion-plus total investment value (TIV) is attributed to projects in British Columbia and Alberta, which traditionally have been top destinations for exploration and production companies. Among the $33 billion-plus set to kick off before the end of the year, the two provinces are home to 84% of the TIV.
About 83% of the Canadian Pipeline Industry’s $40 billion-plus TIV is attributed to projects in British Columbia and Alberta, where takeaway capacity is in high demand. Among the $16 billion set to kick off before the end of the year, the two provinces are home to more than 89% of the TIV.
The Oil & Gas Production Industry has the most active projects of any one industry that are set to kick off in Western Canada in 2018, in both number and total investment value (TIV). Husky Energy Incorporated (TSX:HSE) (Calgary) is on the cusp of breaking ground on a pair of thermal bitumen projects: the $400 million Spruce Lake North and $400 million Spruce Lake Central production and processing plants in Spruce Lake, Saskatchewan. Each will have a capacity of 10,000 barrels per day (BBL/d) and utilize Steam Assisted Gravity Drainage (SAGD) technology.
Two major components of the Enhance Energy and Line 3 projects are expected to begin construction in 2018: Enhance Energy's $155 million segment running from Red Deer to near Edmonton, Alberta, roughly 130 miles, and Line 3's $60 million Metiskow Crude Oil Pump Station near Provost, which will include three electric motor-driven pump packages from Siemens AG (Munich, Germany).
Cenovus has its eye on an $800 million Phase H expansion at Christina Lake, which would add another 50,000 BBL/d of capacity for an estimated total production of 288,000 BBL/d.
Industrial Info also is tracking more than $30 million in maintenance turnarounds at Cenovus facilities that are scheduled for 2018.
Next year, Cenovus expects to reduce its per-barrel oil sands operating costs by 8% and per-barrel oil sands sustaining capital costs by 12% when compared with its 2017 forecast, according to a company press release. It also expects to reduce expenses through more efficient drilling, development planning, and scheduling for oil sands well start-ups.
"Our priorities for 2018 are to reduce costs and deleverage our balance sheet while maintaining capital discipline," said Alex Pourbaix, Cenovus' chief executive officer. "The sooner we can achieve our long-term debt ratio goal, the sooner we can move to balance returning cash to shareholders with disciplined investments in high-return growth."
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