The need for a more robust energy delivery infrastructure is presenting challenges and opportunities for further expansion throughout North America, according to JLL’s 2018 Energy Outlook report.
Essential to the oil and gas industry is the underlying infrastructure and none is as important as the pipeline network. Pipelines transport oil, gas or their derivatives to ports or refineries where it can then be shipped to other parts of the world or refined and used domestically. Where some regions benefit from a vast network of pipelines, areas such as Alberta and west Texas are facing a capacity shortage given burgeoning production and overburdened infrastructure.
In Canada, Kinder Morgan’s Trans Mountain pipeline project is a $7.4 billion expansion proposed to run parallel to the existing Trans Mountain pipeline. Connecting output from the Alberta oil sands to the Pacific Coast, the expansion will increase capacity from 300,000 to 890,000 barrels of oil per day and unlock access to world markets, according to the report. In a time in which trade agreements with the U.S. are not entirely guaranteed, Canada is looking to take the initiative in seeking out trade partners overseas, though it has some domestic hurdles to overcome first. The project has been met with strong opposition from British Columbia and today sits in limbo. [The Canadian government just announced it would purchase the pipeline and take temporary ownership until a new owner can be found. — Ed] In the meantime, energy-centric cities such as Calgary have seen minimal improvement in the office market despite the price of oil rising considerably. Should the pipeline projects gain approval, Canadian markets will see an increase in demand for office space. The pipeline construction itself would present opportunities to those in the industrial manufacturing sectors. In west Texas, more than half of the oil rigs in the United States can be found in the Permian Basin, where a severe shortage in pipeline capacity exists. To meet this demand, EPIC Midstream is planning to construct a 730-mile pipeline spanning the New Mexico border to Corpus Christi, with Apache Corporation and Noble Energy signing on as primary users.
JLL’s 2018 Energy Outlook goes into more depth on key themes in today’s industry and examines challenges and opportunities in seven energy-centric cities across the United States and Canada. You can find the full 2018 Energy Outlook report here.
