AER approves TransCanada's White Spruce Project paving the way for future growth at Horizon

AER approves TransCanada's White Spruce Project paving the way for future growth at Horizon

The Alberta Energy Regulator (AER) approved TransCanada's White Spruce Project this week.

White Spruce is a 20-inch 72 km pipeline designed to carry light synthetic crude oil (SCO) from Canadian Natural Resources' (CNRL) Horizon upgrader to the Grand Rapids Pipeline MacKay Terminal, located about 40 km west of Fort McMurray.

 
 

Fort McKay First Nation (FMFN) was the only participant in the AER hearings since the pipeline would be located within FMFN's traditional territory, coming within 7 km of the Hamlet of Fort McKay. The First Nations community says TransCanada "failed to adequately consult" on the new line, expressing concerns over impacts to the ecology and proximity to a caribou habitat. FMFN also argued that existing pipelines are already capable of handling CNRL's production volumes.

DEBATING FUTURE VOLUMES OUT OF HORIZON

SCO from the Horizon upgrader is currently transported to the Edmonton area through Pembina's 513 km Horizon Pipeline. The line was recently expanded to handle up to 250,000 bbl/day of volumes.

CNRL recently expanded Horizon's nameplate capacity to 250,000 barrels per calendar day, averaged over the entire year. However, assuming an annual 41-day maintenance turnaround, Horizon's stream day production volumes could be closer to 282,000 bbl/day. The company has expressed intentions to eventually expand its oil sands facility to 500,000 bbl/day. 

MAP COURTESY TRANSCANADA

TransCanada's proposed White Spruce pipeline will tie into Pembina's existing line, adding a new tie-in about 20 km south of the upgrader. White Spruce will allow for additional production out of CNRL, making use of the recently completed Grand Rapids System, which is currently under-utilized. 

Grand Rapids is a 50/50 joint-venture between TransCanada and PetroChina Canada (formerly Brion Energy). The $3 billion project has an ultimate capacity of 900,000 bbl/day of crude and 330,000 bbl/day of diluent return, from the MacKay Terminal to the Edmonton area. Up to 520,000 bbl/day of diluted bitumen (dilbit) volumes are reserved for PetroChina, whose in-situ production out of MacKay River should reach 35,000 bbl/day by the end of this year. Grand Rapids also connects to TransCanada's Northern Courier system, transporting dilbit and diluent in and out of the Fort Hills Mine.

THE AER'S DECISION

In their decision, the AER noted there are currently 20 large scale industrial projects in the area, including nine oil sands mines, eight thermal in-situ facilities, three upgraders and several other pipelines. Although there would be land disruptions during construction, TransCanada argued the line would use an existing right-of-way, minimizing environmental impacts of the project.

The in-service date for White Spruce was pushed back from early 2018 to sometime in 2019 due to delays in the regulatory review process. TransCanada estimates the line will cost about $200 million.

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