Alberta Premier Says Canada Could Boost Oil Export to US, Calls for Major New Pipeline

(Reuters) — Canada could add over a million barrels per day (MMbbl/d) of oil export capacity to the United States over the next two years, Alberta Premier Jason Kenney told a U.S. Senate committee on Tuesday.

He also urged Senators to consider building a major new cross-border oil pipeline that would help ensure U.S. energy security, as countries around the world face rising crude prices and a scramble for supply following Russia's invasion of Ukraine.

Kenney and federal Natural Resources Minister Jonathan Wilkinson were in Washington addressing Senate energy and natural resources committee on the issue of energy security.

The Canadian government has previously said Canada could increase oil exports via pipeline by 300,000 bbl/d by the end of this year. 

Kenney said an extra 200,000 bbl/d on top of that could be shipped south by rail, while technical improvements from midstream companies could add as much as 400,000 bbl/d of pipeline capacity by next year.

The Canadian government-owned Trans Mountain pipeline expansion project is also expected to be finished late next year, and will add nearly 600,000 bbl/d, he said.

"Alberta can be a huge part of the solution to the problem of American energy inflation and the cost-of-living crisis," Kenney said, adding the province is the largest source of U.S. energy imports, providing 60% of oil and gas imports.

"With political will from Washington we could also get another major pipeline built that would forever allow the United States to free itself from imports from hostile regimes."

U.S. President Joe Biden revoked a key permit for the Keystone XL pipeline in early 2021, infuriating the Canadian energy industry.

Canada exports around 3.8 MMbbl/d of oil to the United States and until recently faced pipeline constraints that left crude bottlenecked in Alberta and discouraged some international energy companies from investing in the province.

However with the start-up of Enbridge's Line 3 replacement project late last year, Canadian export capacity is now broadly in line with production.

Energy analyst Rory Johnston, founder of the Commodity Context newsletter, said oil production is expected to only grow about 100,000 bbl/d a year going forward, meaning more export capacity would not necessarily mean more barrels crossing the border.

"It's going to take years to fill that much space," Johnston said

Kenney also used his testimony to urge senators to help safeguard the Enbridge Inc. Line 5 pipeline, which the state of Michigan is trying to shut down because of concerns it could leak into the Great Lakes.

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