Just a couple of years ago, TC Energy finally threw in the towel on its long-planned and delayed Keystone XL pipeline project, which would have substantially increased the flow of heavy crude oil from western Canada to refineries and the Gulf Coast export docks. It was a bitter loss. Since then, however, two more companies based north of the 49th parallel have assumed leading roles in the North American crude oil market or, more specifically, in crude oil exports. First, Enbridge acquired the No. 1 U.S. oil export terminal, now called the Enbridge Ingleside Energy Center (EIEC), and related assets for $3 billion, and then, on August 1, Gibson Energy announced that it had closed the $1.1 billion purchase. from nearby South Texas Gateway (STG), which is #2 in crude oil export volumes. In today’s RBN blog, we discuss the growing role of Canadian-based midstream companies along the South Texas coast.
Canada has a way of producing great musical talent: bands like Rush and The Guess Who come to mind, and singer-songwriters like Neil Young, Joni Mitchell and Shania Twain (some may also include Justin Bieber, but we won’t go there). and the US has a way of pretending to be really American, often to the chagrin of our neighbors to the north. (Canadians are also technically Americans: Canada is, after all, the largest country by area in the North or South America, but we won’t go there either.) Our point is that sometimes it seems like Canada doesn’t get the respect it deserves, either in music or in the energy industry. For example, since 1999, Canada has been the largest source of U.S. oil imports (surpassing both Saudi Arabia and Venezuela that year), and in 2022 it supplied a staggering 60% of total U.S. oil imports. raw (It’s nice to have a friendly neighbor you can trust.) Canada also accounts for 99% of US natural gas imports (more than 8 Bcf/d last year, on average) and also helps with the LPG (152 Mb/d). in 2022).
But even great friends have their fights. The recent tug-of-war around Enbridge Line 5 in the Upper Midwest is ongoing, with a judge recently ordering that the pipeline be shut down within three years. But perhaps the most frustrating Canadian-American spat in recent memory was the Keystone XL battle between TC Energy (formerly known as TransCanada) and the US government, which for many years made it essentially impossible for the 1,210 miles and 830 Mb/d. pipeline project to advance construction and operation. The fight to build the Alberta to Nebraska crude oil pipeline was finally lost in January 2021, when it was recently inaugurated. President Biden revoked the project’s presidential permit. TC Energy formally canceled it a few months later. Over the past two years, it has focused primarily on expanding its natural gas pipeline business, including building the 2.1 Bcf/d Coastal GasLink pipeline in British Columbia (in which TC Energy has a 25% stake) and the development of the 1.3 Bcf/m Southeast Gateway pipeline from Mexico. And finally, the final straw: The company in July announced plans to exit the liquids pipeline business entirely and spin off those assets (along with the existing Keystone and Marketlink pipelines) into a separate entity. These assets may begin to look attractive to companies looking to feed crude into Gulf Coast export markets.
