Canadian Oil Pipeline Capacity Remains Tight

CALGARY - While there is spare capacity on some Canadian oil pipeline systems, the National Energy Board (NEB) said today that oil pipeline capacity overall continues to be tight.

According to the NEB's Canadian Pipeline Transportation System Assessment, additional capacity is soon needed to accommodate growing supply and provide greater market flexibility. This is best demonstrated by the recent number of announced and proposed pipelines and expansions to both traditional markets and new markets such as the U.S. Gulf Coast and offshore Asia and California.

"Capacity constraints on oil pipelines in Canada were evident in 2007," said NEB Vice Chair, Sheila Leggett. "While there was some spare capacity, periods of apportionment meant that some pipelines were at times not able to fully meet shipper demand."

High capacity utilization of Canadian oil pipelines is being driven by growing oil sands production and continued strong demand in the U.S. Although some additional capacity will be added in 2008, tight conditions will likely exist for the remainder of the year.

According to the report, there is adequate capacity in place on existing natural gas pipelines. In fact, most NEB-regulated gas pipelines have some excess capacity, even during the peak winter season. Pipeline use declined for most natural gas pipelines in 2007. Stable or declining conventional supply from the Western Canada Sedimentary Basin, growing demand within western Canada, and competition from other supply basins, particularly in the western U.S., resulted in reduced flows on pipelines transporting gas from western Canada.

The report also noted that shippers remain reasonably satisfied with the services provided by pipelines. With respect to the financial strength of pipeline companies regulated by the NEB, the report shows that key financial ratios continue to be stable and credit ratings continue to be investment grade.

This annual report takes a look at the adequacy and economic efficiency of the more than 45,000 km of oil, gas and petroleum product pipelines regulated by the NEB. The report assesses how well the Canadian pipeline system is achieving the following outcomes:

• There is enough pipeline capacity to move petroleum products from producers to consumers;
• Pipeline companies are providing services that meet the needs of shippers at reasonable prices; and
• Pipeline companies are able to attract the financial resources necessary to maintain their systems and build new facilities to meet the changing needs of the market.

The NEB is an independent federal agency that regulates several parts of Canada's energy industry. Its purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest, within the mandate set by Parliament in the regulation of pipelines, energy development and trade. As part of its mandate, the NEB monitors the supply of all energy commodities in Canada and reports its findings. The NEB Internet site is regularly updated with new energy information for the Canadian public.

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For further information:

Lauren Hopkins
Communications Officer
Telephone: 403-299-3712
Telephone (toll free): 1-800-899-1265

Related document:

Canadian Pipeline Transportation System - Transportation Assessment

For a copy of documents:

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National Energy Board
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