Close X
Tuesday, November 19, 2024
ADVT 
National

Experts See More Good Than Bad For Canada's Oilpatch If U.S. Oil Export Ban Ends

Darpan News Desk The Canadian Press, 17 Dec, 2015 11:47 AM
    CALGARY — Experts see more good news than bad for Canada's energy industry if the U.S. lifts its decades-old ban on oil exports.
     
    The ban came into force when oil shortages were commonplace 40 years ago — a stark contrast to today's U.S. glut, thanks to fracking in shale formations in Texas and North Dakota.
     
    Congressional leaders have reached a deal on a massive spending bill that includes allowing the sale of U.S. crude in the global market.
     
    Skip York, a vice-president at consulting firm Wood Mackenzie, says lifting of the ban could make it easier for Canadian crude to get to lucrative Asian markets.
     
    Right now, Canadian players need a re-export permit if they want to ship crude to the Gulf Coast and then export it to Asia via the Panama Canal.
     
    York says a policy change would remove that obstacle, but the first choice for Canadian producers is to still to send their crude by pipeline to the West Coast.
     
    Kinder Morgan's Trans Mountain expansion to the Vancouver area is in the thick of the regulatory process, and has faced vocal opposition. Enbridge's Northern Gateway pipeline to Kitimat, B.C., has regulatory approval, but the Liberal government wants to ban tankers along the northern B.C. coast in what many see as a fatal blow to the project.
     
    Given the hurdles Canadian West Coast pipeline proposals have faced, the Plan B becomes more important.
     
    "It eliminates some of the regulatory burden for a Canadian producer who wants to sell into Asia and can't go through a pipeline to the West. They could still transit through the pipelines that connect Canada to the U.S. Gulf Coast and put it onto a ship," said York.
     
    TransCanada Corp.'s (TSX:TRP) existing Keystone system taps into the U.S. Gulf Coast. The Keystone XL leg, which President Barack Obama rejected in November, would have provided a more direct route between Alberta and Texas. Enbridge Inc.'s (TSX:ENB) network also has the ability to connect to the Gulf.
     
     
    Alan Ross, a partner at law firm Borden Ladner Gervais in Calgary, said it's important to note the differences between Canadian and U.S. crudes. In Canada, it's mostly tough to refine heavy oil whereas the oil flowing out of U.S. shale formations is mainly higher quality light oil.
     
    Gulf Coast refineries are set up to handle heavy crude.
     
    If the U.S. is able to send more of its own crude overseas, "then it may well be that there's more of a demand in those refineries for Canadian heavy to come in," said Ross.
     
    Ross said lifting the export ban could also narrow the price gap between the main U.S. benchmark, West Texas Intermediate, and Brent crude from the North Sea, which fetches a higher market price because it's able to travel around the world by sea.
     
    The higher international price has been a big driver for building pipelines to get landlocked crude to coastal waters.
     
    While there would still be value in those proposals, "if the delta between WTI and Brent is less, then you would view that international access or off-continent access a little bit differently," Ross said.

    MORE National ARTICLES

    Ex-CBC Radio Host Jian Ghomeshi Pleads Not Guilty To Five Charges

    The former host of CBC Radio's cultural affairs show "Q'' is facing five charges including four counts of sexual assault and one count of overcoming resistance by choking.

    Ex-CBC Radio Host Jian Ghomeshi Pleads Not Guilty To Five Charges

    Plane That Crashed In Manitoba Last Month Had Wrong Fuel: Investigators

    The Transportation Safety Board says the Navajo Chieftain aircraft operated by Keystone Air had engine trouble shortly after takeoff on Sept. 15 

    Plane That Crashed In Manitoba Last Month Had Wrong Fuel: Investigators

    Vigil To Be Held For Family Devastated By Deadly Crash In Vaughan, Ontario

    Vigil To Be Held For Family Devastated By Deadly Crash In Vaughan, Ontario
    Nine-year-old Daniel Neville-Lake, his five-year-old brother Harrison, their two-year-old sister Milly and their 65-year-old grandfather died in the crash in Vaughan

    Vigil To Be Held For Family Devastated By Deadly Crash In Vaughan, Ontario

    Son And Grandson Of B.C. Premiers Takes Over As Chairman Of BC Hydro

    Son And Grandson Of B.C. Premiers Takes Over As Chairman Of BC Hydro
    Brad Bennett 's father served as B.C.'s premier and his grandfather, W.A.C Bennett, created BC Hydro when he led the province in the 1960s

    Son And Grandson Of B.C. Premiers Takes Over As Chairman Of BC Hydro

    'Minor Electrical Fire' In Vehicle Involved In Vaughan Crash That Killed Grandfather And Three Kids

    York Regional Police seized the jeep belonging to Marco Muzzo after the deadly crash on Sunday in Vaughan, Ont., north of Toronto.

    'Minor Electrical Fire' In Vehicle Involved In Vaughan Crash That Killed Grandfather And Three Kids

    Defrocked Arctic Priest Eric Dejaeger Pleads Guilty To More Sex-Related Charges

    Defrocked Arctic Priest Eric Dejaeger Pleads Guilty To More Sex-Related Charges
    He is already serving a 19-year sentence for 32 sex offences against Inuit children that he committed between 1978 and 1982 in the remote village of Igloolik

    Defrocked Arctic Priest Eric Dejaeger Pleads Guilty To More Sex-Related Charges