Alberta envisions more oil in its pipelines

The provincial government of Alberta said it would back a process called partial upgrading with an eight-year, $780 million (USD) commitment starting in 2019. Partial upgrading reduces the thickness of the heavier type of crude oil found in the province, which can cut industry costs and improve refinery processing. It also increases the amount of product that can flow through pipelines.

"As we fight for new pipelines and a better price for our oil, we must also create the right conditions for investment and jobs in oil and gas processing and manufacturing," Alberta Premier Rachel Notley said in a statement.

An accelerated rate of crude oil production in North America started straining existing pipeline capacity at least four years ago, forcing the industry to turn to rail transport to take up the slack.

In Canada, pipeline company TransCanada pulled the plug on its Energy East pipeline plans citing regulatory issues last year and its Keystone XL oil pipeline south through the United States is still moving through approval processes.

Plans for expanding the Trans Mountain pipeline through British Columbia, meanwhile, are moving forward, but at a slow pace given the different levels of permitting required.

Nearly all of the oil exported from Canada heads to the U.S. market and, for the week ending Nov. 10, the four-week moving average for exports south was 3.1 million barrels per day. The pipeline network, however, is restrained and the November average for exports by rail was the highest since November 2014.

The provincial government in Alberta said it expects 4,000 new jobs to come from the construction phase of the partial upgrading process. It could be worth as much as $17 billion in growth in gross domestic product for the province over the next 20 years.

"Alberta needs to begin preparing now for the global energy economy of the future," Jeanette Patell, the co-chair of an energy diversification panel, said. "This means building on our existing strengths, which include a wide variety of resources, a skilled workforce and a world-class petrochemical industry."