CALGARY - An analyst says the shelving of TransCanada Corp.'s Energy East pipeline means it's more vital than ever that three other pipelines to oil export markets proceed as planned.
AltaCorp Capital analyst Dirk Lever says Canadian producers will have to transport any new oil production over the next year or so using railcars because the pipelines leaving Western Canada now are essentially full.
He says the next capacity increase is expected to come with Enbridge Inc.'s Line 3 replacement project, which is under construction and will add 370,000 barrels per day of capacity into the United States by early 2019.
But that additional room will only just accommodate new output from oilsands expansions and the situation will remain tight until the Trans Mountain expansion pipeline to the West Coast proposed by Kinder Morgan is in service, expected to add 590,000 barrels per day by late 2019.
TransCanada hasn't yet approved its Keystone XL pipeline into the U.S. but Lever says its 830,000-barrel-per-day capacity will likely provide enough room for Canadian oil production growth until about 2030, when the industry expects Canadian production to reach five million barrels per day.
He says Energy East could come off the shelf if any of the other pipelines don't go ahead or if market conditions change to encourage higher production growth.
"Energy East was more than what was needed," he said. "Producers weren't going to pay for that much excess capacity so I'm not surprised it fell to the wayside.
"If one of those (other pipelines) falls away, then Energy East would be needed."