Keystone pipeline and Oilsands

[MalcolmTucker]

Originally Posted by isaidso

I'm all for creating value added industries in Canada, but why not process this is in the West and pump petroleum to Ontario and Quebec? It's the prairie provinces that need to diversify their economies and need the refineries.

The biggest refinery in Canada is located in Saint John, New Brunswick. I would imagine that Newfoundland sends their product there for refining.

Because there are already enough refineries in the country to provide refined product for all the markets. No point duplicating facilities for a low margin business.

[isaidso]

Originally Posted by MalcolmTucker

Because there are already enough refineries in the country to provide refined product for all the markets. No point duplicating facilities for a low margin business.

The data doesn't support your contention. We refine 1 barrel for every 3 we produce. Without more refineries, it will quickly become 1 barrel refined for every 4 barrels produced. The US actually refines more than they produce so they're creating value off the oil wealth of other nations. There's no reason why we can't get to a 1:1 level or beyond that like the Americans have.

Discarding the value of an industry because its low margin is really short sighted. Refineries are low margin, but you end up with a product that's far more valuable than crude: petroleum. Even more important, you're one step closer to building a petro-chemical industry as you can't have that without the refinery.

We need to stop behaving like a banana republic when it comes to our resources. If we want to remain a high income nation, we need to move up the value chain.

[MalcolmTucker]

The data doesn't support your contention. We refine 1 barrel for every 3 we produce. Without more refineries, it will quickly become 1 barrel refined for every 4 barrels produced.

Discarding the value of an industry because its low margin is really short sighted. Refineries are low margin, but you end up with a product that's far more valuable than crude: petroleum. Even more important, you're one step closer to building a petro-chemical industry as you can't have that without the refinery.

Is there a shortage of refined products in North America? No. Therefor, there must be enough refineries already. Especially since many refineries have closed yet there is still enough supply.

There is a difference between upgrading, and refining that I think you don't get. Upgrading is turning bitumen into a synthetic crude so that refineries designed for light sweet crude (like from Saudi) can use it as feed stock to turn into products. Refining is turning any raw material, from bitumen, to crude, to syncrude, into products.

Refineries on the US Gulf Coast were designed to take heavier crude from Mexico when they were built so can process bitumen at much higher concentrations of feedstocks than most North American refineries.

It makes no sense to build very expensive facilities to add value when you yourself acknowledge the business is low margin.

You say:

Refineries are low margin, but you end up with a product that's far more valuable than crude: petroleum.

which is inherrently contradictory. The low margin comes from the value of feedstock not being much lower than the value of products. If you have enough refinery/upgrading capacity the value of your feedstock will approach if not surpass the value of product minus operating costs (since refineries want to run at optimal throughput).

So, since there is more than enough product capacity in North America today, there is little incentive to build new refineries. The problem is the gap between bitumen, WTI, and Brent, which can be easily solved by building pipes between Cushing and the Gulf Coast. There are already refineries at the Gulf Coast that are operating below capacity that can take a bitumen heavy feedstock. Once supply can flow to them, the price of bitumen in Alberta will normalize at the Brent cost minus transport and upgrading costs.

Due to this, until the excess processing capacity is filled on the Gulf, (and in the future in China), there is no incentive to build upgraders anywhere else, let alone in high cost Alberta.

[Waterlooson]

deleted.

[earl69]

The pipeline will be built - it is simply being set aside until after the election next year. Obama will no doubt give the green light to the re-routed line. If a Republican is elected, green light to everything and anything.

[TallBob]

I still like the concept of refining this stuf in Alberta, given the cost or not. This pipeline is gonna get built and they'll end up rerouting the Nebraska portion. From what I understand in the Omaha World Herald Newspaper, the pipeline re-rout would add 50 miles +/-. This will get built! And Canada/Alberta need to figure out sending this oil to other markets. It should sell itself, right?

[TallBob]

earl69: You think a Republican getting ellected is gonna change this Decision? Don't bet on it. Obama is not neccissarily against this pipeline. The people in Nebraska are the loudest voice in this debate, not the State department. They're involved more so now. And remember some of you guys, George W. Bush stuck it to Canada on the Softwood trade issues and a few others. And the laughable thing in all of this is Harper worships GW.!! Amazing....

[earl69]

My point was that it is going to be built, doesn't matter who is in office.

Anyone who is protesting against the pipeline down south will be quite angry when the messiah Obama gives it the green light.

[bornagainbiking]

I just looked and roughly it is about 1600 miles yes miles from Minot North Dakota (close to border) to the Gulf Coast at Galveston Texas. So that is a lot of pipe and chances for issues.
Maybe the gulf refineries are the best and can handle the task. But how much time will be wasted waiting for an American election.
It could be time to think internal and Asia. We need Canadian gas for Ontario and East.
If we build it they will come.
There are some real knowledgable people here but I speak as a Canadian consumer from Ontario and from a basic supply and demand. I could never grasp why we have Alberta and buy from Off shore.

[TallBob]

It looks like the Keystone pipe line is going to be re-routed.... At least that's what I saw on CNN a little bit ago. The company offered to re-rout it I should say.

[MalcolmTucker]

There are some real knowledgable people here but I speak as a Canadian consumer from Ontario and from a basic supply and demand. I could never grasp why we have Alberta and buy from Off shore.

For a long time it was cheaper to import. Pipelines cost a lot compared to supertankers per unit. That domestic oil is cheaper at all is temporary - it will equalize within a decade. And with profit margins so small, you make decisions on 30+ year time frames, not on todays price.

You may get your wish, if Line 9 is reversed. But it will be pure economics if it does.

Canadians consuming more Canadian oil just means Americans consuming oil instead from whatever place Canada was previously importing from. Since oil is relatively cheap to move in tankers and it matters little where it is from it is highly fungible - prices equalize and it doesn't really matter who is consuming what in any sense but morality.

[shreddog]

Did I just read Mark Twain's obit??

[TallBob]

So according to Debra Yedlin of the Herald says Trans Canada called President Obama's hand in the Keystone pipeline by re-routing the line. Ms. Yedlin is about as ignorant as the rest of the Herald editorial staff! All the people in Nebraska, State department, Obama and everyone else supposedly against this pipeline, in reallity all They ever wanted was for Trans Canada to re-route the line to begin with. Sorry, Ms. Yedlin, The US called Trans Canada's bluff.

[kw5150]

I hope people realize how long it takes for an area to recover from an oil spill. We need to careful about how we move forward with oil transport.

[amor de cosmos]

Alberta govt has been infiltrated by Ontario

Redford stresses need for national energy strategy
By Laura Payton, CBC News
Posted: Nov 17, 2011 7:11 PM ET

Alberta Premier Alison Redford reiterated her call for Canada's provinces to work together on a national energy strategy during a visit to Ottawa on Thursday.

A day after pushing a cross-canada strategy to a crowd of business leaders in Toronto, Redford said after meeting Prime Minister Stephen Harper on Parliament Hill that it's important to think about energy in natural resources with a view to what is going on across the country.

"We as provincial leaders, whether we're from Alberta or Ontario or Quebec, need to be stakeholders and players in what a Canadian energy strategy looks like," Redford said. "A Canadian energy strategy isn't about just exploiting resources and marketing them. It's about ensuring we can talk about the use of energy in an integrated fashion and transitioning in an environmentally sustainable way to a more integrated set of sources."

Redford said she talks specifically about a "Canadian" energy strategy to avoid using the words "national" and "program," which continues to rankle Albertans who saw energy prices drop under a Trudeau plan in the early 1980s.

"I haven't been talking about a national energy strategy. I've been talking about a Canadian energy strategy," she said. "And quite frankly one of the reasons for that is that I'm from Alberta and when you put those words together there certainly is a connotation."

http://www.cbc.ca/news/politics/stor...rd-ottawa.html

[Doug]

Originally Posted by TallBob

So according to Debra Yedlin of the Herald says Trans Canada called President Obama's hand in the Keystone pipeline by re-routing the line. Ms. Yedlin is about as ignorant as the rest of the Herald editorial staff! All the people in Nebraska, State department, Obama and everyone else supposedly against this pipeline, in reallity all They ever wanted was for Trans Canada to re-route the line to begin with. Sorry, Ms. Yedlin, The US called Trans Canada's bluff.

We'll see. If Obama still doesn't approve ASAP, then his bluff (aka that he doesn't take policy direction from Hollywood stars) has been called.

[TallBob]

Doug: That's the game playing involved in politics. Obama's not stupid. He knows how much the US gobles up energy (in this case oil), and along with the State department took their que from the state of Nebraska. I don't think Obama will sit on this very long.

[reidjr]

Originally Posted by kw5150

I hope people realize how long it takes for an area to recover from an oil spill. We need to careful about how we move forward with oil transport.

I guess the question what is worse having a pipeline where sure there could be a spill or having a ship carry the oil i think there is a far great risk with a ship.

[Vaillant]

we should stop oilsands! Soon we will have palm trees in Quebec because of Bad Alberta

[shreddog]

Originally Posted by Vaillant

we should stop oilsands! Soon we will have palm trees in Quebec because of Bad Alberta

But think how much fun Nicko would have on his weather reports!!!

Seriously though, everyone does know that growth in the oilsands and keystone really aren't related ... right?