Record Number of Oil Moved by Train!
Canada waits for the construction of more pipelines whilst breaking records in oil exports. Statistics by the New National Energy Board set the record at 199,000 barrels of oil exported per day in the month of May. This growth is promising and will not slow down in the near future. Statistics show that the number is expected to grow about 500,000 barrels more per day during the next two years. However, the construction of new rail lines plays an increasingly crucial role in the successful transportation of oil.
Canadian oil sand producers continue to see growth in the output volume of oil as investment in pipeline projects continue to expand. Since existing pipelines are currently full, oil sand producers’ growth is highly dependent on the execution and development of these projects.
Given this situation, producers are turning to trains for transportation of crude oils and the demand for new rail lines is only going to grow until the necessary pipelines are implemented.
Consequently, prices are being affected seeing how rail line alternatives have higher transportation costs. Adding the needed pipeline capacity will allow Alberta to receive US $7 more for each barrel than transporting it via railing to the U.S.
On top of that, some oil services had to slow down this year since trains were busy with the transportation of other commodities such as grains. The appropriate investments have been made in capital, locomotive power and personnel to ultimately grow Canada’s oil transportation capacity through new rail lines. The investments make sense since the country is rich in oils and hence needs to exploit its resources efficiently. While pipelines have been the main source for transporting oil in Canada, railway has become increasingly important as well
Canadian Pacific Railway said it ran about 20,000 carloads, 60 trains each month in just one quarter. Some oil companies are looking to make long term investments and deals with railways companies.
Although transporting oil through rail lines is an important project in Canada today, moving oil by pipelines is less expensive and safer. Therefore, oil producers have nothing left but to wait for more pipelines to be built and use trains as the alternative to transport oil. The absence of enough pipelines has caused a spike of oil transported to the United States via trains since 2010. This trend is sure to continue spiking as demand for oil grows and the lack of pipeline forces producers to turn to trains for alternative transportation.
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For the first time, since 1999 Russia has decided to implement radical changes to its taxation system on crude and oil products export. The government goal is to raise funds for a far-sighted plan to inject it back into the local economy.
The major changes to expect are the following:
– A steady decrease in export duties on crude and oil products until they cease to exist by 2024. The idea is to substitute export duties with higher oil extraction taxes instead.
– To relieve the burden of increased processing costs, local refineries will be offered tax breaks. To receive a tax break the refinery has to meet one of the following criteria: bearing large transportation costs, have a minimum investment of 60 billion in upgrades between 2016 and 2024, have at least 10% of total output consist of high-octane gasoline products or conform to international sanctions.
Should international market expect a rise in Russia’s oil export?
The refineries which will not receive tax breaks make up only a small fraction of the total output, resulting in an unlikely event of seeing a considerable increase in the country’s oil export volume. With growing oil market prices, drafted reforms include a mechanism which will deter Russia’s major oil producers from focusing on exports by allowing for a re-establishment of high export duties.
High extraction taxes would ultimately place a greater burden on the consumers, specifically those in Belarus and Kazakhstan who are a part of Eurasian Economic Union. With the new tax system in place, consumers will be bearing higher production tax already factored into the price.
How will it affect oil export internationally?
With Russia being one of the top 3 oil producers worldwide, if an international oil market will be seeing no substantial increase in its export there is a lower chance in an increase in oil prices. As commented by Russia’s officials the primary goal is to localize the effects of new duty-free policy and bring in additional funds to Russia’s national budget.
At all times Plainsman is dedicated to providing the kind of personal service and attention our customers deserve. We are constantly in search of new and better products and services to match our customer’s needs and the demands of the industry. Give us a call today at 1-877-448-0586 to find out more information about services and products we offer.
A project worth $9-billion to restore Line 3 pipeline leaves the Canadian oil and gas industry in anticipation of a future rise in price and profits. The upgrade is expected to substantially increase export capacity into the United States with 375,000 additional barrels per day.
Experts are optimistic about the approval and the effects it will have on sustaining Canada’s competitiveness in the industry. Moreover, the project will help eliminate congestion created in the pipeline bottleneck that had forced Canadian oil producer to accept a high discount for their product compared to the U.S. benchmark.
Line 3 improvement is expected to facilitate increased product outflow to the U.S. Midwest, largest importer of Canadian crude oil, as well as the rest of Canada thus supporting existing markets and helping the growth of new ones.
One of the biggest challenges that may delay the construction process is civil protests which are driven by environmental concerns. As to avoid an unpleasant outcome, negotiations currently take place between Enbridge and the Fond Du Lac Band. If no agreement is reached, Enbridge will have to re-route a piece of the pipeline that comes across Band’s land.
What to expect?
To Alberta’s refiners, business and labour groups the project means more jobs, $2.5 billion investment in the state and less crude traveling by rail.
Line 3 is critical in supplying enough crude oil across the country to produce fuel and asphalt.
Predictions are that oilsands production will rise by 1.55 million bpd by 2035, states the Canadian Association of Petroleum Producers.
Plainsman Manufacturing as a manufacturer and distributor of products for oilfield production and pipeline maintenance is closely tied to projects such as Line 3 pipeline upgrade. From projects of national importance to smaller scale ones, plainsman is committed to providing the highest standards in manufacturing and engineering. Safety and quality are a priority for us. To get more information about our products and services give us a call today at 1-877-448-0586 and our team of experts will be happy to assist you.
The work on the Trans Mountain pipeline will resume in August 2018 to prepare a route for the expansion of the pipeline. Work was suspended by Kinder Morgan in April due to disputes between the Alberta and British Columbia governments
In late May, the federal government bought the $4.5 billion pipeline to ensure that it got built, but the Liberal Government doesn’t plan on being the long-term owners of the pipeline.
The project’s aim is to expand an existing Trans Mountain pipe line from Edmonton to the British Columbia coast to allow an increase of oil from Alberta to be shipped to foreign markets. Given the oil price discounts Alberta must swallow due to pipeline bottlenecks and the lack of access to markets outside the United States, the pipeline is critical.
But the British Columbian government, environmental activists and some Indigenous groups have been opposed to it, causing tension between Albert and British Columbia.
Ian Anderson, the head of Kinder Morgan Canada says that the company will secure, survey and prepare the right-of-way in the coming months, and First Nations will monitor the work in order to look for traditional artifacts and medicines.
This means that they anticipate laying physical pipe in a “prepared, surveyed, environmentally protected right-of-way”.
The completion date of the Trans Mountain pipeline expansion is said to be announced later.
Anderson says that the most important thing for him is to get started to demonstrate to Canadians and to his prospective new owners that this project can be executed in a manner that serves the interests of everybody.
The North American Free Trade Agreement (NAFTA) is a trade agreement between Canada, the United States and Mexico signed in 1992 that gradually eliminated tariffs and trade barriers between the three countries
The terms of the agreement are on the table in hopes of modernizing the deal for the current time.
The NAFTA negotiations commenced upon the election of US President Donald Trump. Reopening NAFTA was part of his election campaign in order to put “America First”.
Canadian Prime Minister, Justin Trudeau, stated he is looking forward to the modernization of NAFTA although he doesn’t now agree with president Trump’s reasoning to reopen the deal.
So, what does the NAFTA negotiations means for Alberta Oil and Gas Industry?
The current 23-year old trade deal has driven North American oil and gas renaissance and paved the way for $34 billion worth of energy exports to Canada and Mexico last year.
It is likely that the deal will expand to cover new technology and intellectual property, showing modernization of the 23-year old trade deal.
Alberta has a huge stake in NAFTA. Alberta has become an important part of U.S. energy imports due to energy trade liberalization under NAFTA. Alberta is the US’ largest supplier of natural gas at the moment, averaging nearly $90 billion a year over the past five years.
The US is also Alberta’s largest trading partner for food and agriculture products. Alberta also does billions of dollars in trades in plastics, machinery and organic chemicals.
If the US withdraws from NAFTA, trading to the US will not stop, but it will get more expensive. Changes to NAFTA can reduce investment protection or revert to high tariffs and trade barriers that preceded NAFTA. This could put at risk the tens of millions of jobs in Western Canada because Alberta has the largest number of jobs tied to exports to the US.
Reverting to the old Canada-US Free Trade Agreement would mean that trade between the countries would be governed by higher World Trade Organization tariff schedules. This would also give opportunity for President Trump to impose tariffs that may inflict damage in certain sectors.
For Alberta, a World Trade Organization tariff schedule would see tariffs applied on petroleum liquids crossing the border. Heavy oil from the Athabasca oil sands would face a higher fee than light oil.
Ultimately, the NAFTA negotiations could be a deal breaker for Canada. The current NAFTA agreement creates efficiency and clarity. But without NAFTA, there wouldn’t be any dispute mechanisms in place, and Canada would have to go through the US courts with every trade dispute.
In November of 2017, TransCanada had to shut down the Keystone pipeline after a spill in South Dakota. They were ordered to operate at a reduced pressure later that month. The restriction was only limited to a small part of the pipeline that links Alberta’s oil sands to US refineries.
As of December 1, pressure restrictions were in place from the pipeline’s Luverne pump station to Ludden pump station and on the segment that had the leak. Reduce flows on the Keystone pipeline helped drawn down inventories in the Cushing, Oklahoma storage hub.
On April 3rd, 2018 TransCanada requested that the remaining pressure restrictions on the Keystone pipeline be lifted and the PHMSA approved the request.
In early May 2018, pressure restrictions on TransCanada Keystone pipeline were lifted by the US pipeline safety regulators.
Returning to full capacity on the pipeline is expected to help relieve a bottleneck in Alberta caused by an increased in production with a shortage of pipeline and rail capacity.
A glut of oil has overwhelmed pipeline access markets and contributed to big differences between bitumen-blend Western Canadian Select oil and West Texas Intermediate oil. The price of Western Canadian Select oil went from highs of about US$30 to US$17 per barrel and has caused a series of maintenance shutdowns at oil sand producing facilities that had to reduce production.
The lower prices have led some companies to produce less heavy oil in the first quarter, while companies such as Husky Energy Inc. started buying heavy oil for use in its refineries because it was cheaper than producing its own oil.
Paul Miller, TransCanada’s head of liquids, said in a conference that there wouldn’t be a big increase in their throughput once the ban is lifted based on some changes they have already made. This means that the lift would be a minor input on TransCanada’s throughput.
TransCanada has been moving historical volumes with drag-reducing agents and the lift will make it easier for TransCanada to operate.
What do you think about the restriction lift? Let us know in the comments below.
What is Bitumen and Why a Pipeline is Important?
Bitumen is a naturally occurring, highly viscous hydrocarbon contained within the oil sands deposits. Bitumen is usually solid at room temperature and has a tar-like consistency. It must be diluted or heated to flow through pipelines because it does not flow freely.
Like crude oil, Bitumen is made up of hydrocarbons, but it also contains more carbon than hydrogen, and more impurities such as nitrogen, Sulphur and heavy metals. Impurities must be removed and the carbon-hydrogen imbalance must be corrected in order to produce synthetic crude oil.
Bitumen is processed in three steps:
- Extraction– solid and water are removed
- Upgrading– upgrade heavy bitumen into lighter, intermediate crude oil product
- Refining– Refine crude oil into final products such as diluents, lubricants and gasoline
The hot-water process is used to extract bitumen from oil sand. Mined oil sand contains 10 to 12% bitumen and the rest is made up of mineral matter and water.
The oil sand is mixed with water in a processing drum or pipeline during the hot-water process. Bitumen float upwards when droplets of bitumen separate from the grains of sand and attach themselves to small air bubbles.
A mixture called slurry is created and it is sent to the separation vessels where bitumen-rich froth is skimmed from the top. Coarse sand is pumped to disposal sites when it is settled.
88-95% of bitumen mined in oil sands is recovered. Bitumen extracted from the oil sands require extra processing or upgrading before it can be turned into products such as fuel and sold to refineries. Bitumen is upgraded by coking the bitumen and by hydro-processing, or a combination of the two.
Coking bitumen involves removing carbon from the fractions of bitumen. It also involves thermally cracking the heavy fractions at 468 to 498 degrees Celsius to product lighter fractions and petroleum coke.
Hydro-processing bitumen involves adding hydrogen. It offers higher liquid yields, better distillate qualities and lower emission levels of Sulphur dioxide compared to coking, but at a much higher expense.
Crude Oil Refining
Crude oil is turned into final products for consumers and industrial use in refineries. These produces include fuels such as gasoline, diesel, kerosene and consumer products such as oil lubricants and asphalt.
Why is a Pipeline Important?
Crude oil from the Alberta oil sands is commonly transported to US and Canadian refineries by pipeline. A pipeline transports gas and oil from remote producing regions to Canada and the United State’s more populated areas.
Pipelines are a safe way of transporting gas and oil over long distances and also the most practical way to deliver oil and gas.
Pipelines are important because Canadians rely on natural gas and products made from crude oil to meet more than two-thirds of their energy needs every day. Pipelines are the energy lifelines of almost every activity of daily life. Natural resources like crude oil and natural gases are consumed daily.
Pipelines are an important industry to Canada’s economy, providing jobs and tax revenues. Pipelines are expected to add $175 billion to Canada’s economy over the next 30 years.
Plainsman Manufacturing manufactures and distributes products for oilfield production, pipeline maintenance, automated emergency shut down, construction and gas, and water distribution. Over the past 50 years, we have built a solid distribution base that includes oilfield supply stores, PC pump suppliers, OEM’s, chemical pump and instrumentation companies and utility companies in Western Canada.
It is known that the oilfield industry inherently poses many hazards. Therefore, it is crucial to have and implement emergency shutdown systems that will minimize risks. These are put in place to proactively tackle an emergency and protect humans, industrial plants, and the environment.
Implementing an emergency shutdown system offers a disciplined, systematic approach for hazard identification, safety requirement specifications, and safety system designs, operations and maintenance. For optimal operational efficiency and safety, we have laid out the most important reasons as to why oilfields must have emergency shutdown systems.
- Safety: Enough protection from failure or danger. Safety controls are designed so that anything that can harm a system, does not influence the operating state of a plant, where the hazard potential is lowered. Measuring safety levels will indicate the chance of a system not performing during its specified time interval.
- Reliability: The ability of a system to fulfill its function during its operation time. To measure reliability, experts use “Mean Time Between Failure”.
- Availability: The probability that a system will function. This is calculated in percentage, by dividing the mean operating time between the mean down time of a system.
Emergencies in the oilfield typically involve:
- escape of hydrocarbons
- fire outbreaks
- pressurized gases
In short, emergency shutdown systems are so important because, in case of an emergency, not having these, can bring a series of detrimental repercussions: economically, environmentally, and operationally.
Elements in a Shutdown System:
- Emergency shutdown valve
- Valve actuator
- Emergency shutdown controller
It is crucial to conduct risk analysis that follow the high safety standards. Generally, emergency shutdown systems need a high SIL (Safety Integrity Level) of 2 or 3. This defines the level or risk-reduction given by a safety function or procedure. The chart below depicts the Emergency Shutdown levels used in the petroleum industry:
|ESD Level||Action||Magnitude of incident||Cost of Incident|
|1||Total facility shutdown||Catastrophic||Less than $10,000|
|2||Unit or plant shutdown||Severe||Up to|
|3||Equipment shutdown||Major||Up to|
|4||Equipment protective system shutdown||Slight||Less than $10,000|
|5||Non-ESD process and control alarms||Routine||Around|
The activation of an Emergency Shutdown System should be as simple as possible, and the measurements taken depend on the magnitude of the emergency. Also, inspectors and personnel should be trained and knowledgeable when assessing these kinds of protection systems. Trainings should include proper operation and maintenance procedures from start-up to shut down, as well as during operations and during an emergency such as a leak or spill.
Learn more about Plainsman’s Shutdown Systems here! http://plainsmanmfg.com/products/safety-shutdown-systems/
Shutdown by Levels examples of actions
- Shutdown parts of the system
- Isolate Hydrocarbon and/or stop hydrocarbon flow
- Isolate Electrical equipment
- Emergency ventilation control
- Close watertight doors and fire doors
Safety Shutdown Systems from Plainsman include our HiLo-Matic product line. This is a self-contained, zero emission and reliable valve shutdown system that does not require external power. Plainsman is capable of providing a complete turnkey system, assembled, tested and ready for on-site operation.
Remember there is no such thing as zero risk. Thus, it is crucial to plan ahead to minimize and prevent failures, specially in a volatile industry like Oil & Gas. It is beneficial to plant owners, staff, the operations of a plant, and the environment!
Give us a call today! Our team of experts would love to be the ones to help you, Call Toll Free 1-877-448-0586.
Alberta and Carbon
Albertan’s heavily rely on coal as a major source of energy, be it for transportation, heating, or gas. The burning of carbon is linked to the emission of greenhouse gases and carbon pollution. Since Alberta has the highest coal pollution out of all the provinces in Canada, the province’s government is always looking for ways to improve in a way that benefits all citizens.
Why a Carbon Tax and How Will it Work?
Considering that Alberta produces the most pollution in Canada, the government has implemented the carbon tax with the goal of reducing emissions. Ultimately, the tax will encourage Alberta’s families to minimize carbon pollution. The carbon tax will be applied to transportation and heating systems which includes diesel, gasoline, natural gas and propane (it does not apply to electricity).
Carbon Levy Rates
You may be asking yourself, how much will I be charged? and how is this calculated?
Well, at the beginning of 2017, a carbon tax was implemented at $20 per tonne on carbon dioxide emission. As of January 1, 2018, it increased to $30 per tonne.
- Gasoline: Increase from $4.49 per litre to $6.73 per litre
total increase: $2.24/L
- Diesel: Increase from $5.35 to $8.03
total increase: $2.68/L
- Natural Gas: Increase from $1.01/GJ to $1.57/GJ
total increase: $0.50 per gigajoule (GJ)
- Propane: Increase from $3.08 to $4.62
total increase: $1.54/L
Where is My Money Going?
The revenue collected from initiatives to reduce emissions will be going to pay investments that support the transition to this new, fuel efficient, low emission economy. This includes rebates that protect low and middle-income families. It has been projected that 60% of households will get a full or partial rebate. Other places where your money will go to:
- Renewable energy projects and electricity transition projects
- Industrial and consumer energy efficiency programs
- Indigenous climate leadership initiatives
- Environmentally efficient transit and infrastructure projects
What a Carbon Tax Means for the Oil & Gas Industry
Plainsman is committed to improving production and becoming as efficient and waste free as possible. What the carbon tax implies for industries like the Oil and Gas production is that companies who use best practices and invest in energy efficient facilities will be rewarded. On the other hand, companies who do not follow best practices will face higher charges due to the fees implemented. For instance, if a company exceeds the set amount of emissions will have to pay $30/ tonne of emission over the limit.
In this sense, Alberta will be looking to being more competitive and encouraging its companies to follow in these practices. This restructuring is called the Carbon Competitiveness Incentive and will replace the regulations currently set under the Specified Gas Emitters Regulation.
At Plainsman we are committed to becoming sustainable and as waste free as possible. These new regulations will contribute to big oil companies like us, by creating the investment and structure needed for us to move towards these efforts.
Learn more about our products today http://plainsmanmfg.com/products/.
Natural gas is a combination of gases naturally found below the surface and in Earth’s atmosphere that are rich in hydrocarbons. The colorless and odorless gas is mostly comprised of methane, one of the major organic compounds on Earth, which consists of one carbon and four hydrogen atoms. In addition to methane, there are also small traces of combustible hydrocarbon gas liquids and nonhydrocarbon gases. Humans mainly utilize natural gas as a source of energy for heating methods like cooking and electricity generation.
Natural gas is often referred to as ‘fossil fuel’ because it was formed hundreds of millions of years ago from organic matter, like plankton, and other life forms. The gas is usually found in rock formations below the surface of the Earth, with Petroleum. Natural gas reserves are buried deep inside the Earth, close to other hydrocarbons beds like coal and crude oil.
Millions of year ago, plant and animal remain decayed and built up in thick layers, in some cases, mixed with sand and silt. With the help of pressure and heat, some of the organic material turned into coal, while some turned into Petroleum and others into natural gas. In certain places, however, the natural gas transferred into large cracks and spaces between layers of rock.
Natural Gas Extraction
To extract the natural gas, large drills will pierce the Earth and unlock the natural gas from its underground reserves. Then, pipelines will take the weightless natural gas and transfer it to the end user.
It is important to note that natural gas is never used in its pure purest form, it instead goes through processing and is converted into cleaner fuel for consumption. By-products like propane and ethane are also extracted during the processing of natural gas.
In other areas, natural gas will usually appear in the tiny spaces within some formations of sedimentary rock, often referred to as ‘shale gas.’ When natural gas appears in the form of coal deposits, it is referred to as ‘coalbed methane.’
Getting Natural Gas in Canada
To locate natural gases, geologists will first begin to study earth’s structure and behavioral processes. Then, they will locate the types or rock that they feel are likely to contain natural gas deposits. Most times, some of these areas are on land while others are offshore and deep below the ocean floor.
In regard to the delivery process, natural gas is usually transported in pipelines and it is particularly used for heating methods like fueling hot water and appliances.
Canada is the fifth-largest natural gas producer in the world and has recommended natural gas reserves to continue meeting the demand for 300 years, according to the Canadian Association of Petroleum Producers. In addition, roughly one-third of Canada’s energy needs are actually met by natural gas. One thing that’s great about natural gas is that it burns cleaner than other fuels, it is more transportable, and there is a large abundance of it in Canada, with deposits in almost every province and territory.