Existing Oil Pipelines Could Raise Canadian Production By Third If Effective National Oil Policy Adopted...

By CARL 0. NICKLE, Publisher of the 'Daily Oil Bulletin' and 'Oil in Canada'.

Western Canadian petroleum (crude oil and gas liquids) production could be raised to over 800,000 barrels per day some 270,000 barrels daily more than 1960's average if full use were to be made of the already existing oil transport and processing systems, now connected or easily connected with Canadian fields.

Such a level could be reached, without the construction of any major new pipeline system, provided Canada's government adopts an effective 'National Oil Policy' to expand use of domestic oil in Eastern Canada, and to raise exports to United States markets nearest to Canadian fields.

An 800,000 barrels daily production level is not in prospect for 1961, even if Ottawa does act on 'National Oil Policy', but analysis of existing transport systems does demonstrate the availability of physical means to reach a production level of 700,000 barrels daily within six months, and higher levels thereafter, with a high degree of flexibility as to the geographical locations of the markets to be served with the increased yield, and the volume of such increase going to individual market.

In January 1961 Western Canadian petroleum production is about 602,000 barrels daily, some 70,000 bbls above the December level, partly because of 'peak seasonal' needs and partly because such factors as a new (but perhaps temporary) outlet for about 20,000 barrels daily at a U. S. Puget Sound refinery. (For February, the present forecast is for production of 586,000 barrels daily, and for March only 552,000 barrels daily, with even smaller volumes during the spring months, unless a National Policy changes the outlook).

In this current month, the two major oil pipeline systems reaching east and west from Canadian fields still have a combined unused transport capacity of some 228,500 barrels daily, including 122,000 barrels daily surplus capacity in the TransMountain pipeline across the Rocky Mountains to the Pacific Coast, and 106,500 bbls, daily minimum surplus capacity in the Interprovincial pipeline between Alberta and Superior, Wisconsin, at the Head of the Great Lakes. Between Superior and Sarnia, Ontario, the Interprovincial pipeline has a January 196 1 surplus capacity of 99,500 barrels daily, and between Sarnia and Toronto the present surplus capacity is 37,000 barrels daily.

The Trasnmountain pipeline system, which has a transport capacity of 250,000 barrels per day, is connected with refinery capacity (at Kamloops and Vancouver, B. C. and in the Puget Sound, U. S.) about equaling its maximum thrust. Of this about 150,000 barrels of refining capacity is at Puget Sound, where 57,000 barrels of January requirement is being put through Transmountain from Canadian sources. The British Columbia refineries, with some 100,000 barrels capacity, are using some 75,740 barrels obtained through Transmountain this month. At Vancouver, Transmountain has marine tanker loading facilities, which haven't been used since the Suez Crisis period of 1957, and these add further flexibility to the system by making possible tanker deliveries from the pipeline to say the large refining complex at San Francisco.

The Interprovincial pipeline system is somewhat more complex than Transmountain. It receives deliveries of Western Canadian oil at Edmonton from Alberta fields, at Regina from southwest Saskatchewan fields, at Cromer from southeast Saskatchewan and southwest Manitoba fields. It delivers Alberta oil to Saskatchewan refineries through connecting lines into Saskatoon, Moose Jaw and Regina; a combination of Prairie oils to Manitoba refineries at Brandon and Winnipeg, and assorted Western Canadian oils through connecting lines or directly into United States refineries at St. Paul Minneapolis, Superior, Northern Michigan gas, Toledo and Detroit; plus deliveries to Ontario refineries at Fort William (by tanker from Superior), Sarnia and Toronto.

Of Interprovincial's total January 1961 deliveries, a relatively small percentage (7 2, 00 0 barrels daily) is being landed at American refining centres, which have a total refining capacity exceeding 300,000 barrels daily. The bulk of deliveries is to Canadian refineries in Saskatchewan, Manitoba and Ontario. In January the two large Ontario refining centre with refinery capacity of 267,000 barrels daily (159,500 at Sarnia, 107,500 at Toronto) are taking some 220,000 barrels daily of Western Canadian oil, a sharp seasonal boost of some 60,000 barrels daily over December.

Under an effective National Oil Policy, the existing Interprovincial pipeline system could be used more fully to (1) utilize Ontario refining capacity with Canadian oil to displace foreignorigin products now absorbing some 60,000 barrels daily of Ontario market; (2) increase the small proportion of Canadian oil now serving Detroit (75,000 barrels daily refining capacity) and Toledo (205,000 barrels daily refining capacity); and (3) supply some Canadian oil at Superior, Sarnia or Toronto for transshipment by tanker to Montreal (refining capacity 295, 800 barrels daily), from April to November during open season of the Great LakesSt. Lawrence Seaway system.

A portion of Western Canadian production, of course, does not use the Transmountain or Interprovincial systems. This includes production being used at Alberta's refining centres, Edmonton, Calgary, Bowden, Harrell, Grande Prairie, Wainwright and Lloydminster; northeast British Columbia refineries at Fort St.John and Dawson Creek; and the Northwest Territories refinery at Norman Wells.

The degree of flexibility that is open for market expansion under a National Policy, making use of existing transport facilities, is illustrated on the Map "Canadian Oil Transportation Systems", prepared by the 'Daily Oil Bulletin' and accompanying this article. The Map gives details of Transmountain and Interprovincial pipeline capacities, the average thruputs by sections in January 1961 and November 1960, the unused or surplus capacities for these months. Also shown are 'tanker routes' which. could be made use of in connection with enlarged use of the pipeline systems, and the daily capacity of refineries in each major