Alberta Signs Oil and Gas Agreement With Enbridge to Boost Production

The Enbridge logo is shown at the company's annual meeting in Calgary on May 9, 2018. The Canadian Press/Jeff McIntosh

The Alberta government is partnering with energy company Enbridge to expand pipeline capacity in the hope of strengthening its role as a key supplier for North America’s energy security chain.

Premier Danielle Smith announced the signing of a letter of intent with Enbridge on Jan. 6. The agreement includes forming a working group with Enbridge and the Alberta Petroleum Marketing Commission, which manages the province’s oil and gas resources. The working group will focus on boosting Alberta oil and gas exports to Canadian and U.S. markets by exploring opportunities for transportation, storage, terminal facilities, and market access along Enbridge’s 29,000-kilometre network.

Smith said Alberta’s goal of doubling oil production aligns with Enbridge’s plans to expand its pipeline systems. “We look forward to partnering with them to enhance cross-border transport solutions. This will also allow us to play a role in supporting the United States in its energy security and affordability goals,” she said.

The announcement comes amid U.S. President-elect Donald Trump’s threat to impose a 25 percent tariff on Canadian imports. Smith said she is “very concerned” about the impact the tariffs could have on the oil and gas sector.

The premier said she will attend Trump’s inauguration on Jan. 20, hoping to convince the incoming U.S. administration that “we are the Americans’ best friend and trading partner” and that Alberta can provide the resources the United States needs.

The United States produces 13 million barrels of oil daily but consumes 20 million, Smith said. Alberta already supplies 4.3 million barrels and hopes to help fill the 7-million barrel shortfall by expanding pipeline capacity and crude oil production.

U.S. refineries are equipped to process heavy oil, but there are limited sources of it. Alberta’s pipeline is already connected to the U.S. system, supplying oil to around 50 refineries, Smith said. “We’re a lot more optimistic about this plan going ahead with the new administration and their outlook coming in.”

The working group will coordinate with the government to reduce red tape and streamline regulations and permits. Smith said current processes are “too slow and too cumbersome” to compete with the regulatory changes expected in the United States.

The group will look for investment opportunities that benefit the province and Enbridge, including leveraging Alberta’s BRIK (Bitumen-Royalty-In-Kind) program, which makes royalty payments to the Alberta government in the form of bitumen instead of cash.