Although TransCanada’s Keystone XL tar sands pipeline has received the lion’s share of media attention, another key border-crossing pipeline benefitting tar sands producers was approved on November 19 by the U.S. State Department.
Enter Cochin, Kinder Morgan’s 1,900-mile proposed pipeline to transport gas produced via the controversialย hydraulic fracturing (โfrackingโ) of the Eagle Ford Shale basin in Texas north through Kankakee, Illinois, and eventually into Alberta, Canada, the home of the tarย sands.ย
Like Keystone XL, the pipeline proposal requires U.S. State Department approval because it crosses the U.S.-Canada border. Unlike Keystone XL – which would carry diluted tar sands diluted bitumen (โdilbitโ) south to the Gulf Coast – Kinder Morgan’s Cochin pipeline would carry the gas condensate (diluent) used to dilute the bitumen north to the tarย sands.
โThe decision allows Kinder Morgan Cochin LLC to proceed with a $260 million plan to reverse and expand an existing pipeline to carry an initial 95,000 barrels a day of condensate,โ theย Financial Post wrote.ย
โThe extra-thick oil is typically cut with 30% condensate so it can move in pipelines. By 2035, producers could require 893,000 barrels a day of the ultra-light oil, with imports making up 786,000 barrels of theย total.โ
Increased demand for diluent among Alberta’s tar sands producers has created a growing market for U.S. producers of natural gas liquids, particularly for fracked gas producers.
โTotal US natural gasoline exports reached a record volume of 179,000 barrels per day in February as Canada’s thirst for oil sand diluent ramped up,โ explained a May 2013 article appearing inย Platts.ย โUS natural gasoline production is forecast to increase to roughly 450,000 b/d byย 2020.โ
Before Eagle Ford, Kinder Morgan Targetedย Marcellus
Pennsylvania’s Marcellus Shale basin was Kinder Morganโs first choice pick for sourcing tar sands diluent for export to Alberta. It wasn’t until that plan failed that the Eagle Ford Shale basin in Texas became Planย B.
Known then as the Kinder Morgan Cochin Marcellus Lateral Projectย proposal, the project fell by the wayside in Februaryย 2012.
โThe companyโs Cochin Marcellus Lateral Pipeline would have started in Marshall County, West Virginia, and transported natural gas liquids from the Marcellus producing region of Pennsylvania, West Virginia and Ohio,โ wrote theย Mount Vernon Newsย of the canned project. [It] would [then] carry the [natural gas] liquids to processing plants and other petrochemical facilities in Illinois andย Canada.โ
โKinder Magicโ: More toย Come?
Industry market trends publication RBN Energy described Kinder Morgan’s dominance of the tar sands diluent market as โKinder Magicโ in a January 2013ย article.
โThese are still early days for the developing condensate business in the Gulf Coast region,โ RBN Energy’s Sandy Fielden wrote. โPlains All American and Kinder Morgan are developing the potential to deliver at least 170,000 barrels per day of Eagle Ford condensate as diluent to the Canadian tar sand fields in Alberta by the middle ofย 2014.โ
Fielden explained we could see many more of these projects arise in the comingย years.
โWe have a sense that before too long there will be many more condensate infrastructure projects showing up like ‘magic’ in midstream companyย presentations.โ
While the industry press coverage sounds optimistic, it doesnโt account for the concurrent rise of public opposition to dirty energy pipelines and expansion plans in the fracking and tar sands arenas, so only time will tell the fate of Cochin and itsย kin.
Photo Credit:ย Official White House Photo by Peteย Souza
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