Plains eyes Rockies expansion as oil shippers seek more pipeline space from Canada

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Highlights

May bring quicker access to refining, export markets

Line 3, Keystone XL, Trans Mountain delays stretch on

WCS discount to WTI narrows to $11.60/b Tuesday

Washington —
Plains All American Pipeline launched an open season this week to gauge demand for an expansion of its Western Corridor pipeline system to move more oil from Canada, Montana and Wyoming toward refining and export markets on the Texas Gulf Coast.

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The pipeline builder aims to boost capacity by 70,000 b/d and start service in the second quarter of 2021, it said in a notice.

The expansion could eventually move crude onto the proposed Red Oak and Liberty pipelines bound for Texas export terminals in Corpus Christi and Houston. Plains is a joint venture partner with Phillips 66 on the Red Oak project, which was eyeing initial capacity of 400,000 b/d depending on shipper commitments.

Western Canadian crude prices face pressure from pipeline constraints as the three main proposals for new takeaway capacity face protracted delays and court challenges. S&P Global Platts assessed Western Canadian Select at Hardisty at a lofty $11.60/b discount to the NYMEX WTI calendar month average Tuesday, up from minus $12.10/b Monday. But discounts for the grade have been much worse over recent months, having averaged nearly $46/b to WTI over October.

Differentials spiked in early December when the Alberta government announced it would order production curtailments starting in January.

Platts Analytics expects Enbridge’s 370,000 b/d Line 3 expansion to begin moving crude into the US Midwest in mid-2021, and TC Energy’s 830,000 b/d Keystone XL and/or the Canadian government’s 590,000 b/d Trans Mountain expansion to be completed by late 2022.

Alberta Premier Jason Kenney said the province might extend its production cuts into 2020 due to delays in Enbridge’s Line 3 expansion. In June, a Minnesota appeals court reversed the Line 3 approval after determining its environmental review was inadequate.

Platts Analytics had expected Line 3 to start up in the second half of 2020 before the court reversal.

— Meghan Gordon, meghan.gordon@spglobal.com

— Laura Huchzermeyer, laura.huchzermeyer@spglobal.com

— Edited by James Bambino, newsdesk@spglobal.com