Category Archives: oil

Joe Oliver: Yet more proof foreign radicals (yes, radicals) are sabotaging Canada’s economy

Joe Oliver: Yet more proof foreign radicals (yes, radicals) are sabotaging Canada’s economy

We’ve reached a crisis resulting from unrelenting opposition to pipeline construction, abetted by foreign funding and a federal government obsessed with green ideology

Special to Financial Post

Joe Oliver

March 13, 2018
9:08 AM EDT

pipeline protest
People recently gathered to protest the Trans Mountain pipeline expansion project at the Kinder Morgan tank farm in Burnaby, British Columbia.Courtney Pedroza/The Seattle Times via AP

 

The latest proof is in, although the facts have been obvious for many years. Foreigners are financing and organizing opposition in Canada to natural resource development, part of an anti-fossil-fuel campaign that is costing our economy an estimated $15 billion this year, due to lack of access to international markets, and much more in lost capital investments.

Perhaps the most recent little gem will finally get the chattering class to acknowledge reality: A leaked U.S. document preparing mass-action protests against Kinder Morgan’s Trans Mountain pipeline expansion project. It sets out goals and operating principles for a clandestine organization designed to drive political resistance under the guise of an independent rank-and-file protest movement.

“Action Hive Proposal” was written by Cam Fenton, an employee of 350.org, a California-based NGO “building a global grassroots climate movement.” Using insect analogies (theirs, not mine) the “Hive” contributes money, action and organizational experience and technical know-how, while a “Swarm” will generate mass action. Fenton is explicit about its “Purpose & Shared Goals: This group is coming together to support mass popular resistance to construction of the Kinder Morgan pipeline.”

This is not the only U.S. organization devoted to blocking development of Canada’s oil and gas reserves that, incidentally, would compete with America’s own resources. Vivian Krause, a Vancouver-based researcher and writer, has documented the money funnelled through Tides Foundation, New Venture Fund and the Oak Foundation to impede Canadian hydrocarbon growth, especially the oil sands.

These organizations are bolstered by a coterie of narcissistic celebrities whose vacuous certainty is outdone by their ignorance of science and economics and their extravagant carbon-intensive lifestyles.
 All this brings to mind when, as minister of natural resources, I wrote an open letter labelling certain environmental groups as “radicals,” financed in part by non-Canadian donors. The derisive outcry was deafening from media, opposition parties, ENGOs and even a few timorous senior executives in the oil and gas business.

I once challenged any environmental organization to name a single project it supported

I defined radical as opposition to every major resource project. Moreover, I issued a challenge to any environmental organization to name a single pipeline project that it supported. The silence was deafening. Possibly because my definition sounded too reasonable, the media never reported on my explanation of the definition or the challenge, which I reiterated numerous times.

What I said was factual then and has been conclusively proven to be true over the past six years. Trying to shut down fossil-fuel development is not viewed as radical to many environmentalists, even though the economic consequences would be disastrous. Or perhaps it was impolite in Canada to use the “r” word. It was obviously politically incorrect.

Irrespective of terminology, we have undoubtedly reached a crisis resulting from unrelenting opposition to pipeline construction, abetted by foreign funding and a federal government obsessed with green ideology.

It is telling that opponents are unimpressed by governments’ efforts to reduce greenhouse gas (GHG) emissions. They understand that Canada cannot make a meaningful difference to international emissions, since our output represents only 1.6 per cent of the global total. Their focus is on the oil sands, which they claim can measurably add to the global supply of oil, so keeping fossil fuels in the ground is their goal. The fact the oil sands only represent a minuscule one-thousandth of global emissions makes it the wrong target. But symbolism is everything.

Militants are indifferent to the terrible damage they are inflicting on our economy, First Nations and the poor, all without any measurable impact on global warming. Further, they assert that Canada has a moral responsibility to make costly but ineffective sacrifices, even though other countries are not doing their share.

The B.C. government’s campaign against the Trans Mountain pipeline expansion proves there is no point in succumbing to extortionate demands or making costly concessions to achieve an elusive social licence. The goal posts keep moving. By now, that must be evident even to Alberta Premier Rachel Notley and federal Natural Resource Minister Jim Carr, though they will never admit it.

At what point might Kinder Morgan headquarters in Houston cancel the project in frustration with its mounting financial and reputational risk? That would landlock Canada’s energy for a very long time, a disastrous result, which is the goal of opponents. It is time for Parliament to declare the pipeline a work “for the general advantage of Canada,” thereby removing most dilatory tactics (but not social resistance). Prime Minister Justin Trudeau should also tell foreign agitators to butt out of Canadian affairs.

Joe Oliver is a former minister of finance and of natural resources.

 

Foreign direct investment in Canada plunges to the lowest in eight years

Foreign direct investment in Canada plunges to the lowest in eight years

And for the first time in a decade foreign companies sold more Canadian businesses than they bought

Bloomberg News

Theophilos Argitis

March 1, 2018
11:08 AM EST

 

Foreign direct investment into Canada plunged last year to the lowest since 2010, hampered by an exodus of capital from the nation’s oil patch and worries about the fate of the North American Free Trade Agreement.

Direct investment dropped 26 per cent in 2017 to $33.8 billion, Statistics Canada reported Thursday in Ottawa. Capital flows dropped for a second year, and are down by more than half since 2015. The investment that did take place was from reinvested earnings of existing operations. Net foreign purchases of Canadian businesses turned negative for the first time in a decade, which means that foreign companies sold more Canadian businesses than they bought.

The shrinking investment underscores how the energy slump is lingering in a Canadian economy that last year also began to face the additional headwind of growing U.S. protectionism. It also marks a setback for Prime Minister Justin Trudeau’s Liberal government, which has emphasized attracting foreign companies.

Foreign Direct Investment FDI 2008 - 2017

Falling foreign direct investment is important. The country’s economy has relied heavily on foreign funding since the global recession — totalling more than $500 billion since 2008 and about $130 billion over the past two years alone, according to balance of payment data.

Unlike portfolio investment, foreign direct investment is considered a stable source of funding that comes with the additional benefits of a transfer of know-how. Instead, an increasing amount of Canada’s funding needs are being met by short-term funds denominated in foreign currencies — which makes the country more vulnerable to a sudden loss of interest from foreign investors.

ConocoPhillips and Royal Dutch Shell Plc are among the companies that led the exodus from the nation’s energy sector last year. The biggest foreign investment in Canada last year was the purchase by Hong Kong’s richest man, Li Ka-Shing, of Reliance Home Comfort, a water heater and air conditioner firm for $2.82 billion.

And the numbers continue to move in the wrong direction. According to Bloomberg data, foreign acquisitions of Canadian businesses fell to $3.8 billion in the fourth quarter, the lowest since 2009.

CAPP Economic Report Series: A Global Vision for the Future of Canadian Oil and Natural Gas

CAPP Economic Report Series: A Global Vision for the Future of Canadian Oil and Natural Gas

drilloing pipe oil

I am pleased to provide you with a link to A Global Vision for the Future of Canadian Oil and Natural Gas, the first in a series of economic reports to be released by CAPP throughout 2018.

This report looks ahead at a carbon-constrained future in which Canadian oil and natural gas can thrive under the right conditions. It addresses significant issues facing industry today such as competitiveness, market access, climate and innovation, and benefits to all Canadians and our Indigenous peoples.

There is a place for Canadian oil and natural gas in the future global energy mix but only if industry and government work together to strike a balance between environmental stewardship, energy security, and prosperity for all Canadians.

The key issues addressed in our report include:

  • The Future Energy Mix – Canada’s role to help meet the future global energy demand as the world’s population grows to 9.8 billion people by 2050.  While renewable energy will play a larger role in the future energy mix, oil and natural gas will continue to account for 52 per cent of total energy demand.
  • Climate Leadership and Innovation – Innovation and the adoption of cost-effective clean technology will ensure the future of sustainable development of Canadian oil and natural gas.
  • Market Access – There is an opportunity to supply the world with Canadian oil and natural gas but without access to emerging markets, a streamlined regulatory system, and a competitive tax structure we risk losing capital to competing jurisdictions.
  • Benefits – All Canadians benefit from a healthy and robust oil and natural gas industry. In 2015 the energy sector contributed more than $160 billion to the country’s gross domestic product, and nationally created more than 640,000 jobs, and invested $3.3 billion in 396 Indigenous businesses in 66 communities.
  • Competitiveness – Competition for global capital investment is strong in other jurisdictions such as the United States, and competes with Canada for the same traditional markets. Although the U.S. is Canada’s largest customer, it has now become our largest competitor.

 

Canada is poised to become one of the world’s most sustainable energy suppliers at a time when environmental stewardship and responsible development are needed the most. In order for our oil and natural gas to be part of the global future energy mix, we must urgently address the challenges facing industry today.

To be balanced Alberta should have completely blocked BC wine from passing through it

do not pass go

To be balanced, Alberta should not have just blocked the sale of BC wines in Alberta; Alberta should have blocked all BC wine from passing through it to other provinces.

This would have stopped the flow of BC wine to the rest of Canada – a major market.

And, this should have been done on the grounds of, “Wine contributes to drunk driving, alcoholism, and the like.”

This is what BC is doing to Alberta and Saskatchewan.

By blocking pipelines, BC is stopping Albert and Saskatchewan oil from reaching major markets.

And by Alberta using the reason of “Wine contributes to drunk driving, alcoholism, and the like” – they would have a far better basis for the action.

Eric

Investors bail on trapped Canadian oil as pipeline woes deepen

Investors bail on trapped Canadian oil as pipeline woes deepen

Kinder Morgan pipe

Canada’s energy companies can’t get any love, even from many Canadians.

With pipeline, regulatory and political frustrations reaching new heights, the nation’s energy stocks slumped to their lowest level in almost two years this month. The iShares S&P/TSX Capped Energy Index ETF, which tracks Canadian energy companies, has seen about $56 million in outflows this year versus $32 million in inflows for an ETF focused on U.S. stocks. The pain has extended to the fixed-income market, with U.S. dollar high-yield bonds from Canadian energy issuers returning less than their global peers in the past 12 months.

At the heart of the sector’s woes is a dearth of pipeline capacity, which has depressed Canadian oil and natural gas prices. A new regulatory regime designed to speed up pipeline approvals is instead seen delaying projects while Alberta and British Columbia are fighting over one of the conduits the federal government has approved. On top of that, the industry is facing carbon taxes other jurisdictions don’t have to pay and it’s competing with American drillers which are seeing taxes cut under the Trump Administration.

“I’m not crazy about Canada,” Paul Tepsich, founder and portfolio manager at hedge fund High Rock Capital Management Inc. in Toronto, said by phone. “We’ve got taxes going up and regulations going up.”

Tepsich said he reduced the average exposure to Canadian energy equities in his clients’ to well under 3 percent from 8 percent a year ago. And while credit exposure remains relatively steady, he has no plans to add new holdings. He’s been adding to short-dated U.S. Treasuries amid market volatility and will look to selectively add U.S. energy names.

The big albatross for Canadian energy companies has been weak prices, caused by the pipeline pinch. Western Canadian Select, the main grade of oil extracted by Canadian oil-sands producers, is trading near the widest discount to West Texas Intermediate crude in almost four years. Alberta Energy Co. natural gas prices are also lagging their U.S. equivalent. WCS discounts would cost the Canadian economy about C$15.6 billion a year, or 0.75 percent of GDP, if maintained at current levels, Scotiabank Chief Economist Jean-Francois Perrault said in note.

The pipeline frustrations recently erupted into a trade war between oil-producing Alberta and neighboring British Columbia after the coastal province proposed limiting new shipments of oil-sands crude through its borders, possibly stalling a major expansion of the Kinder Morgan Inc. oil pipeline. Alberta Premier Rachel Notley banned imports of B.C. wine and abandoned talks to possibly buy more electricity from its neighbor.

Prime Minister Justin Trudeau’s government also announced earlier this month a plan to revamp the national energy regulator with a goal of giving the industry a speedier, more efficient approval process. But the plan also may include adding new types of projects that require federal approval and allows more input for some stakeholder groups, sparking industry fears it won’t become any easier.

Legal Challenges

The proposed legislation appears to effectively prevent any major new project from reaching any form of positive recommendation, the research team at GMP FirstEnergy, a major investment bank to the energy sector, said in a note. “A lack of hard timelines and a regulatory process that has been subject to dithering and near endless legal challenges will become the major stumbling block for domestic and international investor confidence in the Canadian energy sector.”

Federal Resources Minister Jim Carr said earlier this month the Liberal government has balanced government support for the energy industry with protecting the environment and receiving input from Canadians, noting C$500 billion in projects are planned over the next decade.

Banker and bondholder willingness to refinance debt and give companies time to boost output helped keep many struggling producers out of bankruptcy as oil prices slumped in recent years. Investor flight means it will be tougher for Canadian energy companies to access financing for capital-intensive projects. Suncor Energy Inc.’s $14 billion Fort Hills project, approved when WTI was $100 a barrel but started production last month, may be the last of a generation of mega Canadian oil-sands projects.

‘Zero Confidence’

“I’m inclined to believe that we don’t see another oil-sands project built,” Geof Marshall, the guardian of $40 billion of assets at CI Investments’ Signature Global Asset Management in Toronto, said by phone. The majority of his energy holdings are concentrated in U.S. regions like the Permian Basin, where there’s more capacity to move the commodity, he said.

Rafi Tahmazian, who helps manage about C$1 billion in energy investments at Canoe Financial in Calgary, said he began trimming holdings of Canadian energy equities after Justin Trudeau was elected in 2015. He started shifting further into the U.S. after Donald Trump became president and vowed to trim regulations and environmental protection.

Canada needs to cut taxes and ensure pipelines and LNG terminals get built, Tahmazian said.

“My job as an investor is to gauge and make investments based on my confidence in a leader of a company and a country, or a province or a state,” he said. “And I have zero confidence there right now.”

Scotiabank says pipeline constraints to cost economy $10.7 billion in 2018

Scotiabank says pipeline constraints to cost economy $10.7 billion in 2018

Saskatoon / 650 CKOM
Canadian Press

Scotiabank says pipeline constraints to cost economy $10.7 billion in 2018

Ian Bickis, The Canadian Press

CALGARY — Delayed oil pipeline construction is causing a steep discount for Canadian crude prices that is costing the economy roughly $15.6 billion a year or about 0.75 per cent of GDP, according to Scotiabank.

“Pipeline approval delays have imposed clear, demonstrable and substantial economic costs on the Canadian economy,” said bank chief economist Jean-Francois Perrault in a report Tuesday.

The discount, however, is expected to ease through the year as more rail capacity becomes available to ship oil, bringing the expected cost to roughly $10.7 billion or 0.5 per cent of GDP for 2018 and then $7 billion or 0.3 per cent of GDP a year until more pipeline capacity comes online.

The costs come as delays continue for all three major proposed oil pipelines to export more oil from Western Canada, including Kinder Morgan’s Trans Mountain expansion, Enbridge’s Line 3 replacement, and TransCanada’s Keystone XL.

Canadian producers would need Line 3 and at least one of the other pipelines to go forward or face indefinite pipeline constraints that would have an impact on Canada’s well-being with consequences that extend well beyond Alberta, said Perrault.

“The elevated discounts come with a steep economic cost, and represent to a large degree a self-inflicted wound,” he said.

The latest economic impacts of the pipeline constraints come as Alberta and British Columbia continue to quarrel over the construction of the Trans Mountain project, pitting arguments of economic impact against the importance of protecting coastlines and limiting greenhouse gas emissions.

The current squeeze in pipeline capacity has been expected for some time, but the leak and temporary shutdown on TransCanada’s Keystone pipeline last November sped up the problem, said Perrault.

The shutdown led to oil storage tanks in Alberta to fill to record volumes and sent the spread between Western Canadian and U.S. crude to more than US$30 a barrel, while the regulator-imposed 20 per cent reduced capacity on Keystone has continued to limit a recovery.

The discount on Western Canadian oil production since the spill has hovered around US$24 a barrel, much higher than the US$13 spread for the past two years, and Scotiabank expects it to average US$21.6 a barrel for 2018.

Western Canadian production is discounted somewhat both by quality and transportation costs, but has spiked several times in the past decade as pipeline space runs tight.

Saskatchewan oil-rights sales up 30%

TOTAL PUBLIC OFFERING REVENUE FOR 2017-18 FISCAL YEAR REACHES $65 MILLION

Released on February 8, 2018

Sustained interest in Saskatchewan’s southeast region generated the majority of revenue in the February public offering of Crown petroleum and natural gas rights on Tuesday, with the $3 million from that sale pushing the final total for the 2017-18 fiscal year to $65 million.

This total exceeds the previous fiscal year-end total of $50 million as industry activity and investment shows sustained signs of trending upward in the province.

“Saskatchewan is consistently a jurisdiction of choice for conventional producers looking for stability and solid returns,” Energy and Resources Minister Bronwyn Eyre said. “Increased drilling activity and industry investment indicate that one of our key economic sectors continues to gather momentum and stimulate growth in the province.”

Southeast Saskatchewan remained the focus of attention with 52 leases, consisting of 3,448.152 hectares, fetching $2,452,992.19. Spartan Energy Corp. bid $1,039,679.96 for 18 leases in southeast Saskatchewan totaling 1,295.206 hectares. One lease south of Carnduff received a bonus bid of $325,346.74 for 129.5 hectares. This lease was purchased by Spartan Energy Corp. and is prospective for oil in the Midale and Frobisher Beds of the Madison Group.

Saskatchewan’s oil and gas industry accounts for an estimated 15 per cent of the province’s total real Gross Domestic Product (GDP), and is the largest contributor among primary industries to provincial GDP.

In the Fraser Institute’s Annual Global Petroleum Survey for 2017, Saskatchewan ranked seventh out of 97 jurisdictions in the world in terms of overall attractiveness for oil and gas investment, and has consistently been among the top 10 jurisdictions over the past six iterations of the survey.

The next public offering of petroleum and natural gas rights will be held on April 10, 2018.

-30-

For more information, contact:

Deb Young
ECON
Regina
Phone: 306-787-4765
Email: deb.young@gov.sk.ca

Evraz responds to pipeline dispute between B.C. and Alberta

Evraz responds to pipeline dispute between B.C. and Alberta

CJME News

Evraz responds to pipeline dispute between B.C. and Alberta

Evraz North America, the company that operates Evraz Steel in Regina, is responding to the pipeline dispute between Alberta and British Columbia.

Alberta Premier Rachel Notely recently announced her province will be banning imports of wine from B.C.

This trade sanction is in retaliation to the B.C. government’s announcement of limiting the increase of diluted bitumen, which will effectively block the Trans Mountain Pipeline.

Now Evraz is weighing in on the issue because thousands of jobs in Canada rely on the expansion of the pipeline.

“(Evraz) was awarded a contract to produce approximately 275 thousand tons of pipe for this pipeline at our Regina, Sask. operations. The pipe is produced here in Canada by Canadians and uses Canadian raw materials,” said Conrad Winkler, president and CEO of Evraz North America, in a news release.

Evraz Steel began manufacturing pipe for the project in October 2017 after being awarded the contract by Trans Mountain. Manufacturing is to continue through May 2019.

“This project is real and we are building it with Canadian workers, materials and technology,” Winkler said in the release.

“Evraz North America operations in Canada employ over 2,000 people directly and generate between six and 10 times as many indirect jobs throughout the supply chain mainly across Western Canada. We are looking forward to a resolution to this impasse and to continuing production of the most technologically advanced, clean and safe steels for pipelines and oil country tubular goods right here in North America.”

PSAC urges the Government of Canada to uphold the rule of law and our Constitution

PSAC urges the Government of Canada to uphold
the rule of law and our Constitution
Calgary, Alberta (February 5, 2018) – The Petroleum Services Association of Canada (PSAC) is extremely disappointed and concerned that the Government of British Columbia has announced that it is proposing “a second phase of regulations to improve preparedness, response and recovery from potential spills” related to pipelines transporting liquid petroleum products. Over two years, stringent research and studies were conducted by the National Energy Board, the Canadian Energy Assessment Agency and the BC Environmental Assessment Office for the expansion of the Trans Mountain pipeline. The result of this rigorous process was to approve the expansion of Trans Mountain and to declare it to be in the national interest by the Government of Canada.

Further proposed study and regulations by the BC government can only be viewed as yet another tactic to deny to land-locked provinces, vital access to tidewater that BC freely enjoys and all while pursuing export opportunities for its own petroleum products. “This is not the time for inter-provincial trade wars as we pursue free trade agreements with the US and Asian countries,” says Mark Salkeld, President & CEO of PSAC. “Now is the time for the Government of Canada to uphold Canadian rule of law and our constitution.”

“Investment capital is already fleeing Canada due to competitive concerns. Lack of certainty for major project development and infrastructure will not help but only serve to drive away even more potential investment and with it Canadian jobs and economic prosperity,” continued Mark Salkeld.

The oil and natural gas industry is the leading contributor of private capital investment in this country supporting over 640,000 jobs across the country and thousands of businesses, including over 700 in BC. The industry’s responsible development of our natural resources also provides the funds for technical innovation, research and development and clean-tech to improve environmental performance and reduce GHG emissions.

Canada is already losing billions of dollars a year having only the US as its one customer for oil and natural gas negatively affecting job creation and funding for health care and education while the US moves to become a leading exporter, reaping benefits that could be ours.

“Pipelines are the safest way to transport our energy which supplies us with the fuel we need for our vehicles, planes and transport for our food and other products; the fuel that provides us with our quality of life that so many take for granted and that those in developing countries who live in energy poverty can only dream of,” says Scott Van Vliet, Chair of PSAC and CEO of Environmental Refuelling Systems Inc.  “We may want to move to renewable energy but it will take years and right now we need all forms of energy. Canada has one of the most robust regulatory regimes in the world with leading environmental standards. Canadians should be proud to supply the world with our responsibly developed oil and natural gas for a better quality of life.”

The Petroleum Services Association of Canada is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. As the voice of Canada’s petroleum service, supply and manufacturing sector, PSAC advocates for its members to enable the continued innovation, technological advancement and in-the-field experience they supply to Canada’s energy explorers and producers, helping to increase efficiency, improve safety and protect the environment.

– 30 –
PSAC Media Contact:
Mark Salkeld
President & CEO
Email: media@psac.ca
Phone: 403.264.4195

Why pipelines matter to SK: $320 million in missed royalties plus billions in capital spending per year!

The difference between what western Canada is getting for our oil and could be getting, is; vast, caused by pipeline constraints, and is costing Saskatchewan $320 million in missed royalties per year and reasonably $-billions in capital spending per year.

WTI crude is trading at $65 US per barrel today, while Western Canada Select (WCS) is trading at $35 (see charts below).  WTI is the often quoted price in the news and is largely the USA price – however, most Canadian crude is priced as WCS.  Brent crude is generally the price of oil shipped by tankers around the world – Brent is at $68 per barrel today.

WCS prices at a discount to WTI because it is a lower quality crude and because of a transportation differential. The price of WCS is currently set at the U.S. Gulf Coast. It costs approximately $10 per barrel for a barrel of crude to be transported from Alberta (the major hubs) to the U.S. Gulf Coast, accounting for at least $10 per barrel of the WTI-WCS discount.

So of the current $30 differential we can account for $10 – but what about the other $20 differential?

Pipeline constraints have caused the transportation differential to rise significantly – see the CBC story below.  Heavy discounts on our crudes were attributed to crudes being “landlocked” in the U.S. Midwest due to pipeline constraints.

So, what does this cost Saskatchewan?

That is unclear, but, from the Government of Saskatchewan 2017/18 budget, “a US$1 per barrel change in the fiscal-year average WTI oil price, results in an estimated $16 million change in oil royalties.”

How the WTI/WCS pricing factors into this formula is not readily apparent, but let’s take a stab at it.

Using something I call CRAP math – which is cumulative resultant arithmetic pontification – or “back of the napkin” type of calculations – the $20 differential (from above of $30 – $10) at $16 million per barrel impact is logically approaching $320-million in missed oil royalties to the Province of Saskatchewan – every year!

More importantly, if the price we received for our oil was 57% higher – from $35/barrel up to $55/barrel ($65 WTI less $10 for shipping) – more wells would be drilled and more oil produced.  This would cause significant job increases and local spending in Saskatchewan. The economic impact measure of this is best represented by the last oil boom, with; the dramatic increase in housing values in Estevan and Weyburn over the past several years, demands for employees sky-rocketing, car-sales taking-off, etc.

And, with more oil being produced, royalties when them climb again due to a production increase being added to the price increase.

What is holding all of this back – a lack of pipelines!

 

WTI Pricing – $US – for the past year

WTI Feb 2 2018

Source:  http://www.oilsandsmagazine.com/energy-statistics/real-time-oil-prices-wti-brent-wcs-energy-stocks#WTIfutures

Western Canada Select (WCS) Crude Pricing – $US – for the past year

WCS Feb 2 2018

Source:  http://www.oilsandsmagazine.com/energy-statistics/real-time-oil-prices-wti-brent-wcs-energy-stocks#WTIfutures

Brent Crude Pricing – $US – for the past year

Brent Feb 2 2018

Source:  http://www.oilsandsmagazine.com/energy-statistics/real-time-oil-prices-wti-brent-wcs-energy-stocks#WTIfutures

_______________________________________________________________

Crude comparisons

Source:  http://www.oilsandsmagazine.com/technical/western-canadian-select-wcs

______________________________________________________________________

Pipeline bottlenecks push Canadian oil price to deepest discount in 4 years

Canadian oil selling for just $30 a barrel, even as West Texas Intermediate nears twice that price

By Pete Evans, CBC News Posted: Dec 13, 2017 2:34 PM ET Last Updated: Dec 13, 2017 3:19 PM ET

http://www.cbc.ca/news/business/canada-oil-price-1.4446698

 

The price gap between the price of Canada’s oil benchmark versus its U.S. equivalent, West Texas Intermediate, has widened to its biggest difference in almost four years, with Canadian crude now selling at a $25 discount.

The heavy oil coming out of Alberta’s oilsands is known Western Canada Select. It usually trades at a discount to the better known U.S. benchmark, West Texas Intermediate, in part because it is more difficult to process.

But this week, the gap expanded to more than $25 US a barrel, due to transport bottlenecks on pipelines and by rail.

WTI WCS differential late 2017

Most Canadian oil is shipped down to refineries on the U.S. Gulf Coast to be refined into usable products like gasoline, diesel and jet fuel. That means Canadian producers have to compete with U.S. shale oil companies, who also sell to those same refineries and don’t have nearly the same level of transportation headaches to deal with.

TransCanada’s Keystone pipeline was shut for several weeks after a spill last month, and rival Enbridge said this week it plans to ration its capacity on a key oil pipeline between Edmonton and Wisconsin by one fifth this month.

At the same time, shipments of crude by rail are inching higher, but are still lower than they were several years ago.

The transportation bottlenecks are putting the squeeze on Canadian oil. “We have a lot of oil in the oilsands,” said Conor Bill, managing director of Mount Auburn Capital Corp., “and the problem is there aren’t a lot of ways to get that crude out of the area where it’s produced.”

The supply imbalance is especially vexing considering the price of WTI has been on a run lately, ever since an OPEC deal last month to maintain production cuts. The WTI price is up by 33 per cent since June, and a barrel of U.S. oil was changing hands at $56.81 on Wednesday.

Contrast that with a barrel of Western Canada Select, which can be had for just $31.72 US on Wednesday. That’s a gap of $25 a barrel — the widest seen since 2013, before the price of oil collapsed.

“Producers with access to international markets are earning higher receipts,” said Shane Thomson, a foreign exchange trader with Cambridge Global Solutions. “The Canadian economy is not seeing the full benefit of the increase in global prices.”

Instead of higher prices, Canadian producers are having to cut their prices to get their product to market. “You need to cut the price in order to incur the costs to ship it out of there,” Bill told the CBC’s On The Money on Tuesday.

The price gap could stick around a while longer, since transportation issues show no signs of easing any time soon.

“It will continue,” Bill said.

 

 

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