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NEB releases oil transport capacity optimization report

Don Horne   


The National Energy Board (NEB) released its report examining short and long-term options to optimize oil pipeline capacity out of Western Canada – and there are no surprises as to what is needed.

The report states that any notable increase in pipeline or rail capacity would need to come from new major infrastructure projects as current pipeline capacity is fully utilized and rail infrastructure is operating at or near capacity.

“The oil pipeline systems are currently running at capacity and market players are operating within the rules set up in tariffs and legislation.,” says Jean-Denis Charlebois, chief economist, National Energy Board. “This report points to potential improvements that can be made and we have identified options for governments to pursue.”

The information gathered by the NEB in preparing this report did not raise concerns relating to compliance with existing rules governing monthly nomination processes, which is the method for shippers to request access to a pipeline each month. While there can be improvements, changes to this process would reallocate pipeline space among shippers, but would not increase utilization.


Minister of Natural Resources Amarjeet Sohi asked the NEB to look at the current monthly nomination process to assess available capacity on oil pipelines; examine ways to optimize oil pipeline capacity out of Western Canada; and explore if there are short-term steps to further maximize rail capacity.

In the short-term, market issues could be improved by:

  • Creating predictable timelines and clear policies related to pipeline capacity to help market participants make more informed decisions; and
  • Developing better market data to help market participants and policy makers make investment decisions.

Potential long-term solutions in the absence of new pipeline capacity could include:

  • Upgrade bitumen to a higher quality product to reduce the volume of diluent needed and open up space on existing pipelines;
  • Reverse pipelines currently importing diluent to export more crude oil; and
  • Ship undiluted bitumen in rail cars to increase the volume of bitumen exported by rail.

Other findings from the report

  • Long-term investment and large infrastructure changes would be needed to implement some of these solutions; they may also become uneconomic if and when new pipeline capacity comes online; and
  • Moving crude by rail is a more complex process than moving crude by pipeline and is not a perfect substitute for additional pipeline capacity.


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