Alberta Oil: Report on America
The ties that bind still lie south of the border
Being a neighbor to the world’s largest oil consumer can be a blessing and a curse. It’s a blessing because the United States imports 10 million barrels of oil daily to meet its energy needs and Canadian producers are well positioned to take advantage of this thirsty market. But the curse is that the U.S. is so big that any oily development there (think the U.S. State Department’s decision on the Keystone XL pipeline) heavily impacts the Canadian industry and the people who work in it. And of late, many of those developments don’t seem to be positive for the oil patch.
That reality was front of mind as we put together the content for our report on the U.S. We didn’t just want to report on what was happening south of the border. We wanted to write about why what was happening in the U.S. matters to the petroleum sector in Alberta and Canada.
For example, Canadian companies – particularly those involved in the oil sands – are extremely concerned about a supply bottleneck south of the border that is dampening prices for North American crude and costing them millions in revenues. That’s why companies like Suncor and Imperial Oil are so keen to see Keystone XL built. But there isn’t just one remedy to the price discounts producers are experiencing. As Steve LeVine, a former foreign correspondent with the New York Times and the Wall Street Journal, writes in this month’s cover story on the art of oil trading, there is more at play here than pipeline bottlenecks.
Or take the issue of refineries. Many companies in the U.S. refining business are retooling their infrastructure in anticipation of handling heavier grades of Canadian crude. But as American authorities introduce measures to curb greenhouse gas emissions, it’s uncertain whether those refineries will be able to afford to take in higher-carbon oil sands crude. Such a development would make it more important than ever to access Pacific Rim markets. Alberta Oil senior editor Jeff Lewis drills into this issue.
Of course, being in the shadow of a superpower isn’t all bad. Technological breakthroughs in the Lower 48 – like hydraulic fracturing and enhanced oil recovery – tend to migrate north and open up new basins and revitalize old ones. Also, Canada’s oilpatch is well schooled in how to co-exist with big brother living next door. But the arrangement is getting trickier to manage and the CEOs in downtown Calgary must skilfully navigate this relationship for the industry to thrive.
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The so called Canadian Oilpatch is owned lock stock and barrel by US Corporations. Their first concern is the US market and therefore the filtering down of benifits to them. How many excuses can the industry conceive to prolong the effort to maintain their control over the US market from the existing infrastructures they have in place world wide. To have their assets become second fiddle to Canadian production isn’t what they see as their assets being compedative. Have you ever wondered why Canada lets their oil go south for $90/brl when if the US were to buy oill based on the Brent Sea index they’d be paying $130/brl. Canada because of this two price system is giving the USA a 30% discount on crude. Lets build the pipeline to the west coast and load the super tankers for Asia at $130/brl now. It is time to use our economic clout on the Americans, we have been brow beat by their dominance for far too long.