Pattern For Canadian Oil Growth Being Set By Pipeline Expansion

By: C. O. NICKLE, M.P.

OTTAWA Ont., Dec. 5 Interprovincial Pipeline Company is going to increase the field to market distance of its oil transport system to about 1,775 miles by immediate construction of 625 miles of thirty inch pipeline from the present eastern terminus at Superior, Wisconsin, direct by shortest route to Sarnia, Ontario. When the $74,000,000 addition is completed next fall, Interprovincial will have one of the longest oil pipelines in the world.

The brief official announcement this week however tells only small part of a story vital to Western Canada's oil industry, the Canadian economy, and North America's defence planning.

The Interprovincial extension completes the basic pattern for a system of eastwest pipelines designed to match growing oil reserves of Western Canada with economic markets from Ontario to British Columbia in Canada and in the Pacific Northwest and Great Lakes area of the United States.

Present phases Transmountain's Pipeline construction from Edmonton to Vancouver and Interprovincial's Superior Sarnia extension are designed to provide in 1954 a market for Western Canadian oil about double the 162,000 barrels daily average yield of 1952, but with sufficient flexibility to provide more rapid growth if emergency conditions warrant.

The basic pipeline patterns, however, are designed for progressive expansion in capacity over the next few years, through construction of additional pumping stations on the Transmountain and Interprovincial mainline, and by looping of the Interprovincial system between Alberta and the Lakehead.

This progressive expansion would provide as reserves, markets and emergencies warranty transport facilities for between 650,000 and 700,000 barrels daily and could within a very few years make Canada more than selfsufficient (in balance) in petroleum. Current Canadian oil hunger is 460,000 barrels daily, having doubled in the past seven years.

Western Canada's oil potential is currently over 280,000 barrels daily, fourteen times the potential of six years ago. Potential may be expected to pass 350,000 barrels daily in 1953 and 500,000 barrels daily in 1955, if oil reserves continue expanding at current rates. Putting an increasing percentage of that potential in work is the objective of pipeline expansion.

Interprovincial Pipeline reached the planning stage in 1949 as a proposed sixteen inch line from Edmonton to Regina, but rapid growth of Alberta oil reserves brought a major change in 1950, when the line was actually built. Gambling on further reserve growth to make the project economic, the backers spent some $90,000,000 to build a 1,150 mile system from the Edmonton area to Lakehead, laying twenty-inch line east to Regina, using up the sixteen-inch pipe from Regina to Gretna, Manitoba, and laying eighteen-inch line from Gretna to Superior, Wisconsin. To boost the capacity of the sixteen-inch stretch, parallel sixteen-inch pipe was laid this year.

Now that reserve growth justifies further major expansion, Interprovincial is setting up a pattern that could in a few years look after Saskatchewan Manitoba and the Lakehead area plus deliver 300,000 barrels daily or more into Sarnia for Ontario, and into the American refining centres of Detroit, Toledo and Cleveland, not far from the Sarnia terminus.

To reach this stage, around $200,000,000 would have to be invested, raising Interprovincial total investment to over $300,000,000. First phase, costing $74,000,000 involves the thirtyinch line from Superior across northern Wisconsin and Michigan, across the four-mile wide Mackinac Straits, south through Michigan to cross the St. Clair River into Canada at Sarnia. Initially this line would have one pump station, and carrying capacity of 100,000 barrels daily.

To raise Sarnia area deliverabiltity to 300,000 barrels, and provide for markets along the route, expansion stages would involve a series of loopings eventually providing a complete new 24inch pipeline on top of present facilities between the Lakehead and Alberta, and more pumping stations along the entire system.

The route planning on the prairies will undoubtedly take into account growth of oil reserves in southern Alberta, Saskatchewan and Manitoba, in order to bring them into a main line system of transport.

The line to Sarnia will permit year round movement of western oil to the Ontario and adjacent markets, replacing the present seven months lake tanker movement and five months' shut dawn, with its winter storage problems. Initial EdmontonSarnia pipeline transport costs will about equal current costs. When ultimate capacity is reached, transport costs mill be materially reduced.

The U.S. Petroleum Administration for Defence has authorized allocation of 160,000 tons of steel for the SuperiorSarnia pipeline, and deliveries of pipe mill commence shortly. Financing arrangements are now being negotiated. Contracts for construction will likely be let before month's end.

West from Alberta, TransMountain Pipeline is scheduled to complete its $81,000,000 24inch pipeline from Edmonton to Vancouver by next August, with oil reaching the coast in October at initial rate 75,000 barrels daily, half for B.C. refineries and half for tanker movement to northern California. In 1954 this line will be extended from Vancouver southward to service the 35,000 barrel General Petroleums refinery to be completed north of Seattle by fall 1954, and will likely also be extended further south in view of expected coming announcements of more refinery plans for the U.S. Pacific Northwest. With added pump stations, the TransMountain line will have ultimate capacity over 200,000 barrels daily.

Long term projections of Western Canadian oil production are difficult because of the many factors affecting it. Here are our newest projections, which could well prove too conservative: This winter's production will average around 170,000 barrels daily, rising to about 235,000 barrels next spring and to over 300,000 barrels next fall, with 1953 daily average over 225,000 barrels, in 1954 the seasonal production peak may exceed 350,000 barrels daily, and the year's average will probably exceed 300,000 barrels.

Going out on a limb some distance, we hazard a guess that come 1956 the Western Canadian oil industry will have oil potential, transport means and markets making the nation, in balance, selfsufficient in petroleum for the first time in its history.