Competition for Canadian Oil
There has been a lot of debate around the Keystone XL pipeline from Canada to Houston,TX. There is a large group of people who are supportive of this project, but there is also a lot of backlash. What if Canada goes elsewhere to export oil? Some people are wondering this exact thing, and luckily, Keith Schaefer has an update on the Canadian Oil Sands and its relationship with the U.S.
Right now all western Canadian oil is shipped to one place: The USA.Alternative markets means: Asia, via a pipeline to the west coast where tankers would transport it across the Pacific.
All this oil supply will be great for consumers, and Canada’s economy (jobs and royalties) and for geo-political stability in energy prices.
But with the US increasing oil production for the first time in 40 years – thanks in large part to the shale revolution in the Bakken oil formation in North Dakota – Glass says there is a chance that the US might not need Canadian oil as much – in the same way he says Canadian natural gas is vulnerable to being shut out of the US market because of increased US natural gas production…
…If any foreign crude gets shut out of the US, says Bedard, he expects it would be imports from Nigeria;”I think Canadian crude squeezes out other crudes. I would sure be surprised” if Canadian crude was displaced out of the US. He added that doesn’t see Cushing ever being full – the builds in supply are slowing, and rail and pipeline capacity out of Cushing is being developed…
…There is no stranded oilsands production right now, but Glass says that $20/barrel discount that Canadian heavy crude is getting compared to other world oils is costing the Canadian economy. Assuming 1 million barrels a day of oilsands production is going overseas, instead of down into the US, Canada could stand to gain about $3.65 billion for every $10/bbl more revenue it could get than it’s receiving now…
Will the U.S. stick with Canadian oil and visa versa? Seems like a pretty sweet deal for both sides. If the pipeline is put in place, it could create a really strong working relationship between the two countries. This would take great pressure off of the transportation portion of the relationship and could provide an even better situation that the current one.
Quotes taken from report by Keith Shaefer, Read the entire article here.
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