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Officials: Controversial Pipeline Won't Hurt N.D. Production

Mon, 03/10/2014 - 2:32pm
James MacPherson, Associated Press

BISMARCK, N.D. (AP) -- The proposed but controversial multibillion-dollar pipelines that would bring a flood of Canadian tar sands oil to the U.S. likely won't hinder North Dakota's soaring crude production, state and industry officials say.

More than 1 million total barrels of tar sand oil from Canada's Alberta province would move through the pair of pipelines, destined for different U.S. refineries than North Dakota's crude, according to Justin Kringstad, director of the North Dakota Pipeline Authority, and Ron Ness, president of the North Dakota Petroleum Council.

The heavy sour crude from Canada is of lower value and more difficult to refine than North Dakota's light sweet crude.

"Here we are awash in oil," said Ness, whose company represents more than 500 companies in western North Dakota's oil patch. "But all these refineries have different crude requirements."

The Calgary-based pipeline companies planning the projects also have a big stake in moving crude from North Dakota, the nation's No. 2 oil producer behind Texas.

"I don't think it will have an impact," Kringstad said of the competing crude from Canada on North Dakota production.

Enbridge Inc. announced a $7 billion plan last week to replace and increase the capacity of a crude oil pipeline that runs from Canada to Wisconsin. That project, which would bump the pipeline's capacity from 410,000 barrels daily to 760,000, is in addition to Calgary-based TransCanada Inc.'s long-delayed $5.3 billion Keystone XL pipeline.

TransCanada's project, which has been stalled by environmental objections, would move 830,000 barrels of oil a day from Canada to Texas' Gulf Coast refineries, as well as about 100,000 barrels of domestic oil daily from North Dakota's Bakken region.

A presidential permit from the State Department is required for both projects because the pipelines would cross the U.S.-Canadian border. Several environmental groups have pushed the State Department to reject TransCanada's application, and also have promised to fight Enbridge's recent pipeline proposal.

Opponents argue that oil sands extraction exacerbates global warming because it takes more energy to produce and generates more carbon dioxide.

Enbridge also is proposing the 612-mile Sandpiper pipeline, a $2.6 billion project that would be largest yet from the oil patch. It would carry 225,000 barrels of oil daily to a hub in northern Minnesota and 375,000 barrels to one in northwestern Wisconsin.

"Enbridge wants to bring a lot of barrels out of the Bakken and they are not going to do something that would jeopardize that Sandpiper pipeline," Ness said.

North Dakota has more than doubled its oil production in the past two years, closing in on a million barrels of oil a day — a barrel is equivalent to 42 gallons. But due to the lack of pipeline capacity in the state, most of the state's production is being shipped by rail.

Ness said more North American oil destined for U.S. refineries ultimately is a positive step to displace the country's reliance on foreign oil.

"It further pushes back the barrels coming from foreign countries," he said.

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