Becca Polak: How Alberta can get oil and gas to market on its own terms

Born and raised in Alberta, I have spent my entire adult life living in Calgary. For most of that time, I worked in business development marketing innovative technologies to oil and gas companies. Anyone who works in the oil and gas industry knows the industry experiences booms and busts. But this time it is different. Light oil in Edmonton is $26.94 USD per barrel, a discount of $27. Heavy crude is trading at $18.20 USD a barrel, a $34 discount. This is an unacceptable situation.

Everyone knows what the problem is: Alberta does not have enough pipeline capacity and are held captive by only having one buyer to sell our product. If we had a pipeline to tidewater like Energy East, Trans Mountain, or Northern Gateway, then this would not be a problem.

Thankfully, Enbridge is replacing its 1960’s era Line 3 with a slightly higher capacity line that will add ~370,000 bpd to our province’s export capacity. The problem is that at best, this expansion only deals with the current bottleneck issue and does not give Alberta any further room to increase production without flooding the market. Without further line expansions/additions in the next year, industry will become even more dependent on rail to transport oil at a cost that makes our industry increasingly less competitive. Alberta’s economy cannot handle this added stress and the provincial budget will become even more unsustainable without increased oil revenues.

Politics is the art of the possible. What we need as Albertans is to look for solutions that we can control. We don’t currently have the ability to build pipelines through BC to the west coast. But we can work with the infrastructure that already exists and build more take away capacity within Alberta.

Therefore, my team and I outlined the following policy which I hope to bring to the legislature Spring 2019:

• There are currently two pipelines importing condensate (a very light oil) to Canada to be used as a diluent for our oil sands bitumen so that it can be pumped through pipelines. These lines are called the Cochin Line (owned by Kinder Morgan) and Southern Lights (owned by Enbridge). Currently Canada is importing 275,000 barrels of condensate a day through these pipelines. These pipelines already exist and connect Fort Saskatchewan to pipeline systems in Illinois where oil can be moved south to US refineries. Alberta should work with Enbridge and Kinder Morgan to have them to reverse these two lines.
• Oil sands operators will continue to need light crudes to dilute their bitumen, but the good news is that Alberta’s liquids production has risen substantially due to exploration and production in shale formations such as the Montney and Duvernay. Some pipeline infrastructure will need to be built in order to achieve this, but all of the new infrastructure will be parallel to existing pipelines and is 100% within provincial jurisdiction. No outside approvals will be required to execute this plan.
• By reducing our provincial imports of Condensate by 275,000 barrels a day we immediately free up that volume on our existing pipelines exporting our oil. By reversing those lines, we add an additional 275,000 barrels a day of export capacity. This creates 550,000 barrels a day of “new” export capacity for Alberta’s oil.

While these solutions will not fix the problem, it will give the industry breathing room until either Trans Mountain or Keystone XL are built.

Becca Polak is a UCP Calgary-Mountain View nomination contestant. The nomination vote takes place December 6.