Energy-rich Canada has a long history of pipeline construction. The Canadian Centre for Energy has identified the post-World War II petroleum discoveries in western Canada as sparking a long-lasting boom in pipeline construction in the country.

Today, new gas and conventional oil discoveries, as well as the development of technology making the commercialisation of oil sands and heavy oil reserves economically viable, are driving the development of pipeline projects.

TransCanada

Described by TransCanada’s immediate past Chairman S. Barry Jackson as “the crown jewel of TransCanada’s capital programme”, the second stage of the Keystone Oil Pipeline Project is currently under construction, after line fill of the first stage of the pipeline was completed in June 2010.

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The first phase of the Keystone project involved the conversion of approximately 864 km of existing natural gas pipeline in Saskatchewan and Manitoba, to crude oil service. It also included the construction of approximately 373 km within Canada of new 30 inch diameter pipeline, 16 pump stations and the Keystone Hardisty Terminal.

The second stage, involving construction of the 480 km Cushing extension in the United States, is scheduled to be completed in the first quarter of 2011.

The proposed Keystone Gulf Coast Expansion Project (Keystone XL) is an approximate 2,673 km, 36 inch crude oil pipeline that would begin at Hardisty, Alberta ,and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. Approximately 526 km of new pipeline is proposed to be constructed through Canada.

Canada’s National Energy Board (NEB) approved TransCanada’s application to construct and operate the Canadian portion of the Keystone XL Pipeline in March 2010, and US regulatory approval is scheduled for late 2010.

Following the NEB’s approval of Keystone XL, the project team has commenced pre-construction activities in Canada, including additional environmental studies and assessments, completing land acquisition easement agreements, and finalising engineering for the pipeline.

TransCanada spokesperson Cecily Dobson said “Construction works on our Keystone XL project will not begin until we receive the Presidential Permit from the US Department of State.”

Contracts for construction works and services are not expected to be awarded until early 2011.

Upon receipt of the Presidential Permit, construction work on the Canadian section of the pipeline will commence with site preparation activities at the Hardisty B Terminal, followed by horizontal-directional drilling along the South Saskatchewan River and Red Deer River. Mainline and pump station construction will begin in mid-2011 to enable Keystone XL to be operational in 2013.

ExxonMobil

On 30 July 2010 ExxonMobil and TransCanada closed the initial open season and received bids from potential shippers on their jointly proposed Alaska Pipeline Project, which will cross through Canadian territory.

The proposed pipeline would extend 2,737 km from Prudhoe Bay, Alaska, USA, to Alberta, where the natural gas could be delivered on existing pipeline systems serving major North American markets.

An alternate route would see the natural gas move from the North Slope to Valdez, Alaska, where it would be converted to LNG in a facility to be built by a third party and then delivered by ship to North American and international markets.

The next step in the project’s development is to assess and negotiate the issues and conditions that are incorporated within the bids received from potential shippers.

The project costs are estimated to be between $US32–41 billion and, if approved, the pipeline could be operational in 2020.

Denali Canada

Denali was formed by ConocoPhillips and BP in June 2008 to construct a pipeline to monetise Alaska’s North Slope gas resources.

The Denali Project is being designed to deliver approximately 4.5 Bcf/d natural gas from Alaska's North Slope to North American markets. The project will consist of a gas treatment plant on the North Slope, construction of a 2,736 km pipeline to Alberta, and if required, a 2,414 km pipeline from Alberta to Chicago. The current estimated cost of the project is more than $US30 billion.

Denali is currently holding open seasons for the US and Canadian portions of the Denali Project. Both open seasons will last 90 days and end 4 October 2010.

Imperial Oil Resources Ventures Ltd

Imperial Oil Resources Ventures, together with joint venture partners, ConocoPhillips Canada, Shell Canada, ExonnMobil Canada and Aboriginal Pipeline Group, have proposed the Mackenzie Gas Project.

The promoters have proposed to develop three natural gas fields in Canada’s Northwest Territories along with a 190 km gas gathering system, a 457 km natural gas liquids pipeline and a 1,196 km natural gas pipeline to connect northern onshore gas with North American markets.

The proposed Mackenzie pipeline system would be built along the Mackenzie Valley and have a capacity of 1.2 Bcf/d of gas. The parties advancing the proposed project are currently focusing on obtaining regulatory approval and the Canadian Government’s support of an acceptable fiscal framework.

A similar project was first slated in 1974 when a consortium of 27 companies, referred to as Canadian Arctic Gas Pipeline Ltd, applied to the NEB to build a pipeline to ship natural gas from Alaska and the Mackenzie Delta to southern markets. In 1977 the NEB denied the application citing environmental concerns.

The application for the current pipeline project was submitted by Imperial Oil Resources in 2004. The NEB is planning to release its Reasons for Decision in approving or denying the project in September 2010; at the time of publication, the decision had not been released.

Nova Gas Transmission

Nova Gas Transmission’s Groundbirch Pipeline is expected to be a 77 km, 36inch diameter extension to TransCanada’s Alberta System. The pipeline would connect sweet natural gas from the Montney formation in northeast British Columbia, to an interconnection on the Gordondale Lateral near the downstream side of the existing Gordondale meter station in northwest Alberta, approximately 11 km east of Bay Tree, Alberta.

The pipeline would be designed to transport about 1.66 Bcf/d of natural gas.

NEB approval was granted in March 2010 and construction of the Groundbirch Pipeline commenced in August 2010 and is expected to be in service by November 2010.

Nova Gas Transmission has also proposed the Horn River Project, which consists of two primary components: the acquisition and operation of the existing NEB-regulated Ekwan pipeline facilities owned by Enana Ekwan Pipeline Inc., and the construction and operation of new pipeline infrastructure.

The proposed project, located in British Columbia, would include the construction of approximately 72 km of 36 inch diameter pipeline running from the Ekwan Pipeline to the Cabin Gas Plant, about 70 km northeast of Fort Nelson. This section is known as the Cabin Section. The project also involves the Komie East Extension, which involves approximately 2.2 km of 24 inch diameter pipeline proposed to run from the Cabin Section to the Fort Nelson North Plant.

Nova’s shippers have requested an in-service date of 1 May 2012.

The NEB hearing process is scheduled to commence in October 2010.

Pembina Pipeline Corporation

In July 2010, Pembina Pipeline Corporation received the Alberta Energy Resources Conservation Board’s (ERCB) approval to construct and operate two pipeline projects that will support northern Alberta's heavy oil industry.

The Nipisi Pipeline will consist of a combination of newly constructed and existing 16 inch and 20 inch pipeline and will provide 100,000 bbl/d of blended heavy oil transportation service for product received at Utikuma and delivered to Edmonton, Alberta. The Nipisi Pipeline will involve the construction of 190 km of new pipeline and will use existing pipeline capacity between Judy Creek and Edmonton.

Pembina Pipeline Corporation has awarded Willbros Canada a contract for the construction of six pump stations for the Nipisi Heavy Crude Pipeline Project to be constructed in Alberta, Canada.

The scope of work includes site grading at select sites, piling, pipe rack, process pipe, installation of process pumps, underground drain tanks, concrete work, and site fencing. Construction has commenced and is scheduled for completion in February 2011.

Pembina’s Mitsue Pipeline will consist of a combination of newly constructed and existing 6 inch and 8 inch pipeline, and will provide 22,000 bbl/d of condensate transportation service for product received at Whitecourt, Alberta, and delivered to Utikuma for use as a diluent for heavy oil. The receipt point of the Mitsue Pipeline is connected to Pembina’s existing Peace Pipeline system at Whitecourt.

Construction on the pipelines will commence in late 2010, and Pembina expects the pipelines to be placed into service mid-2011.

Enbridge

Enbridge’s proposed Northern Gateway Pipeline project involves a 1,172 km twin pipeline system, running underground from near Edmonton, Alberta, to Kitimat, British Columbia.

One line, a 36 inch diameter pipeline with an initial capacity of 525,000 bbl/d, would transport crude oil for export from the Edmonton area to Kitimat. The other pipeline, a 20 inch diameter line with an initial capacity of 193,000 bbl/d, would be used to import condensate.

It is expected that 12 construction spreads ranging in length between 70 km and 190km will be required. The Northern Gateway Pipeline is expected to be in service in 2016, subject to finalisation of commercial terms with industry, and regulatory approvals.

Meanwhile, at the time of publication, line fill was continuing on Enbridge’s Alberta Clipper Pipeline, which is expected to be completed in September 2010.

The 36 inch diameter Alberta Clipper Pipeline will transport oil between Hardisty, Alberta, and Superior, Wisconsin in the US. Initial capacity will be 450,000 bbl/d, with an ultimate capacity of up to 800,000 bbl/d.

Willbros Group constructed the 99km segment of pipeline from Hardisty to the Alberta/Saskatchewan border near Kerrobert, Saskatchewan. The spreads in the US were built by US Pipeline of Houston, Texas, Michels of Brownsville, Wisconsin, and Precision Pipeline of Eau Claire, Wisconsin.

Enbridge has said that the Alberta Clipper Pipeline was constructed in response to a request by industry for increased transport capacity out of the oil sands and into the US Midwest markets with supply from western Canada oil sands developments expected to grow by as much as 1.8 MMbbl/d by 2015.

Pacific North Gas

Operating in Canada since 1965, Pacific Northern Gas (PNG) owns and operates a 587km natural gas transmission system within northern British Columbia.

In 2006, PNG formed Pacific Trail Pipelines Limited Partnership – a 50/50 partnership with Galveston LNG Inc – for the purpose of developing the Kitimat – Summit Lake Natural Gas Pipeline Looping (KSL) Project.

The KSL Project entails the construction of approximately 470 km of up to 36inch diameter pipeline and associated compression facilities, at a cost of $US1.2billion.

The pipeline would provide gas transportation services for up to 1 Bcf/d primarily for Kitimat LNG Inc’s proposed LNG export terminal to be located approximately 15 km southwest of Kitimat.

Subject to a number of conditions, construction of the KSL Project is planned to commence in 2012 for completion in 2014 when the proposed LNG terminal is planned to begin operation.

The company will be working to finalise transportation reservation agreements for the KSL Project by the third quarter of 2010 at which point it will prepare and file its application with the British Columbia Utilities Commission.

Ultramar Ltd

Valero Energy has given its final approval for the construction of the 240 km Pipeline Saint-Laurent Project, in Canada, proposed by its subsidiary Ultramar to link the Jean-Gaulin refinery to the Montreal East terminal and cross 32 municipalities in Quebec.

Ultramar President Jean Bernier said “The Board’s approval allows us to finalise the engineering works and to prepare the construction phase, which should get underway during the fourth quarter of 2010 throughout all of the 32 municipalities crossed by the pipeline.

“We will also be finalising our calls for tender to eventually purchase, among others, the pipe, pumps and related equipment,” added Mr Bernier.

There will be two pump stations along the 16 inch diameter pipeline, which will operate at a maximum operating pressure of 10,200 kPa. Based on the timelines submitted, work will continue throughout 2011 and 2012, for a projected start-up of operations toward the end of 2012.

Encana Corporation

The Deep Panuke Offshore Gas Development Project includes the construction of an approximately 176 km, 22 inch diameter natural gas pipeline from the Deep Panuke mobile offshore production unit, located approximately 250 km southeast of Halifax, Nova Scotia, off Canada’s east coast, to a point of interconnection with facilities owned and operated by Maritimes and Northeast Pipeline near Goldboro. The pipeline will be designed to transport up to 8.5 MMcm/d of sweet natural gas.

Construction is continuing and the pipeline is expected to be completed in 2011.

Suncor Energy

The ERCB has approved Suncor Energy’s proposal to construct a sour gas pipeline and a fuel gas pipeline in the eastern slopes region of south western Alberta.

The approximately 56 km long pipelines will be built in a 20 m RoW and cross a river, creeks and seasonal streams from the Highwood River south to the Chain Lakes area. The sour gas pipeline will consist of a gathering system to transport gas from five well pads to a proposed multi-well gas battery. From the battery, a trunk line will transport the dehydrated and compressed gas to a tie-in on an existing pipeline to the Coleman Gas Plant. The outside diameter will range from 88.9 mm to 273.1 mm.

The proposed fuel gas pipeline will be placed in the same ditch as the trunk line and gathering lines, and will tie-into an existing Suncor fuel gas line. It will transport sweet gas to the five well pads, and have an external diameter ranging from 60.3 mm to 88.9 mm.

The company expects to make a final investment decision regarding the project at the end of 2010.

Williams Energy Canada

Willbros Canada, a unit of Willbros Group Inc., has been awarded a contract to construct the Williams Energy Canada Boreal Pipeline.

The new 12 inch diameter pipeline will deliver high pressure liquids approximately 420 km from Williams’ Liquid Extraction Plant north of Fort McMurray to its Redwater Olefins Facility, northeast of Edmonton.

Construction of the project will be carried out in three construction seasons, commencing in November 2010, with completion expected between March and June 2012.

Pipeline companies transporting ‘outside the envelope’

While the majority of transmission pipelines in Canada are designed to transport traditional fuels, there are also companies transporting unconventional fuels such as ethane and carbon dioxide (CO2) via pipeline.

Mistral Energy

Mistral Energy is proposing to construct a 700 km ethane pipeline from North Dakota, US, to Empress, Alberta.

The proposed Vantage Pipeline would carry ethane from Tioga, northwest through Saskatchewan, before terminating near Empress.

A segment of approximately 570 km will be located in Saskatchewan and a 3 km segment will be constructed in Alberta.

In July 2010 chemical developer and manufacturer Nova Chemicals signed a Memorandum of Understanding with Hess Corporation and Mistral Energy to purchase and transport ethane produced at Hess’ Tioga Gas Plant in North Dakota, via the proposed pipeline.

Application for regulatory approvals will be submitted in 2011. Construction is expected to commence and be completed during 2012.

Enhance Energy

Enhance Energy is building the Alberta Carbon Trunk Line (ACTL), a 240 km pipeline that will capture, transport and distribute CO2 for enhanced oil recovery. The project will safely and permanently store up to 2 Bt of CO2 in depleted oil and gas reservoirs.

Enhance will operate the pipeline and capture facilities. Joint venture partner Fairborne Energy will operate the enhanced oil recovery project at the Clive oil field.

Construction on the 16 inch diameter pipeline is slated for 2012–13 and operations may start up in late 2013.

Enbridge

In November 2008, Enbridge launched its CO2 Slurry Pipeline Project to construct a slurry pipeline that uses CO2 to transport several types of pulverised solids in Alberta.

The pipeline project includes three phases. Phase 1 is a two-year research period to determine the viability of the project. Phase 2 will involve the construction of the pipeline and is anticipated to take approximately three years. The final stage of the project will include commercial operation and market integration of the pipeline.

Assuming that the results of Phase 1 find the project feasible and that funding can be secured, Enbridge expects that construction of a pilot facility could begin as early as 2011. Full commercial operations could commence by 2015.

In addition, Enbridge has applied to construct and operate a diluted bitumen transportation system. The 95.3 km, 36 inch diameter Line 18 Extension Pipeline would run from a proposed new initiating pump station to a terminal at a meter station. The hydrogen sulphide content of the diluted bitumen to be sent down the pipeline would be less than 100 parts per million, with a determined partial pressure of 0.3 kPa.

Subject to obtaining regulatory approval, RoW clearing and crossings construction is expected to begin in the third quarter 2011 with construction of the pipeline and expected to begin in late 2012. The pipeline’s planned in-service date the is second quarter 2013.

Keeping pipelines in the public interest

There are a range of stakeholder interests that are considered before pipeline projects are approved. Canada’s NEB is an independent federal agency that regulates interprovincial and international oil and gas pipelines that exceed 40 km in length, while pipelines that are completely within the borders of a single Province are regulated by that Province’s regulatory body.

The NEB administers the National Energy Board Act, Part III – Construction and Operation of Pipelines as well as Onshore Pipeline Regulations, which set out minimum requirements for all stages of a pipeline’s lifecycle.

The NEB also conducts pipeline system and facility inspections, construction inspections, pipeline crossing audits and inspections, documentation and safety audits, and pipeline accident investigations.

The Canadian Standards Association (CSA) ensures compliance with CSA Z276 for pipelines transporting liquefied natural gas and CSA Z662 for pipelines transporting liquid or gaseous hydrocarbons.

Ensuring safety

In May 2010, the NEB issued a letter informing all regulated oil and gas companies and interested persons of Proposed Regulatory Change (PRC) 2010-01.

PRC 2010-01 describes proposed changes to the NEB Onshore Pipeline Regulations, 1999 and the NEB Processing Plant Regulations.

This regulatory change requires that all companies must develop a ‘security management plan’ to ensure security threats and associated risks to pipelines are identified and managed.

The PRC 2010-01 will be in effect as of 1 April 2011.

Getting projects approved online

In 2008, the NEB launched its online application system (OAS) to gain efficiencies in the regulatory process.

The OAS allows companies and NEB to focus attention on areas of an application that require more detailed information and assessment, while streamlining the routine elements.

The OAS allows companies to build and submit their applications via the NEB website. Companies can use the NEB’s online risk criteria to build their applications.

The criteria used to determine if a project is considered low or high risk are in the areas of consultation, engineering, environment, lands, socio-economics, Aboriginal matters, security, and economics.

Looking forward

Canada’s pipeline industry continues to be fuelled by increasing energy demand and the Canadian Energy Pipeline Association (CEPA), which represents Canada’s transmission pipeline companies, is anticipating a significant expansion in the country’s pipeline network over the next two decades.

In its Integrity First Report, CEPA highlighted that in order to bring new sources of northern natural gas to market and respond to the growing oil production from Alberta’s oil sands, it would be necessary for Canada’s pipeline network to expand significantly in the next 20 years.

The Association’s report indicated that some expansions will be ‘greenfield’ projects, requiring new RoW, and that those new pipelines may cross land already in use, such as agricultural land, and may come within close proximity to rural residents, towns and cities, where safety and compatibility with existing land use is critical.

The report concludes that ultimately, policy-makers, regulators, industry and the public share a common interest in ensuring decisions are made in the best interest of all Canadians. CEPA believes its members have a role and a responsibility to work as independent partners in delivering that goal.