HOUSTON — Barely a day after announcing it was taking control of its royalty barrels, Alberta Energy Minister Brian Jean confirmed the UCP government is already in talks with international oil companies to build more pipelines using Alberta’s share of oil production to backstop new projects.
“Those are taxpayers’ barrels,” he said in an interview with The Western Standard. “They belong to the people of Alberta.”
Under the government’s newly announced royalty plan, it will take physical delivery of its oil in kind and directly market it to potential buyers.
In the oil world, it’s common to use those contract commitments as collateral to build infrastructure such as pipelines, which is what the government fully intends to do.
By putting up oil instead of taxpayer dollars, it gives the government leverage to determine mundane details like specifications and routing. But more important, it also increases the number of barrels it can swing into the market over the longer term.
Presently, that number is about a quarter of gross production of 4.5 million barrels per day (bpd) of both oil sands and conventional oil — or one million barrels, give or take, that can be divided up among potential projects.
At the CERAWeek by S&P Global energy conference, much has been made of Alberta Premier Danielle Smith’s vow to double Alberta’s production to more than 9 million bpd.
Although Jean admits it’s a tall order, he fully expects Alberta to be pumping at least 6 million bpd by the end of the decade and 7 million bpd in the decade after.
But that will take ‘egress’ — a fancy term for plumbing, to take it from point A to B. Pipelines, essentially.
“I love pipelines,” Jean said, agreeing that the focus of modern resource development isn’t security of supply — a new resource evaluation released Wednesday has identified about a trillion barrels of oil and thousands of trillions of cubic feet of recoverable gas in Alberta alone.
The bigger challenge is getting those resources to market to meet what is expected to be surging demand. Rather than ‘drill baby, drill’ the new mantra in Houston is ‘build baby, build’.
Jean confirmed that Alberta is presently looking at intra-Canadian pipe, favouring Canadian companies. Northern Gateway and Energy East have been touted as potential candidates worthy of bringing back to life.
But on Monday Premier Smith said it’s also possible to build out to the Arctic and even Hudson’s Bay. It’s also possible to add shorter ‘loops’ of less than a few hundred kilometres that have the effect of increasing capacity on existing pipes.
That in turn would allow Alberta barrels to flow through the Gulf of Mexico — whatever it’s called by US president Donald Trump — and onto tankers without tariff.
“Personally, I like the ‘Gulf of Alberta’,” Jean said.
