Should energy companies look beyond the U.S.?

[freespirit]

http://www.bnn.ca/News/2011/11/11/Sh...nd-the-US.aspx


The U.S. government's decision to explore alternative routes for TransCanada's (TRP-T 40.81 0.96 2.41%) controversial Keystone XL pipeline and extend the approval deadline to at least 2013 is renewing calls for Canada to seek new markets for its crude.

Sveinung Svarte, President and CEO of Athabasca Oil Sands, tells BNN the delay in TransCanada's Keystone XL pipeline might a blessing in disguise for Canada, as the country loses $15 to $20 billion a year by selling its oil to the U.S below market value.

"Maybe this can lead to export routes being opened to the west and east coast, and that's what Canada needs at the moment to make sure this subsidizing of our crude to the U.S. does not continue," he says. "It could be good for everybody here.

But Robert Huebert, associate professor at the University of Calgary, tells BNN that a decision by Canadian oil producers to focus on new markets will have major political ramifications.

"Anytime you start directing something as core as an energy supply and the amount we have in Alberta you're going to start re-introducing different geopolitical considerations," he says. "Once the U.S. starts recognizing that pipelines are not quite the devil being portrayed in their popular press…they're going to start realizing that if countries such as Canada start looking at alternative markets it's going to hurt their supply and it [will] tie us into the Chinese in ways that we don't fully appreciate."

Huebert says that if Canada increases its energy exports to China, and U.S.-China relations continue to deteriorate, Canada will be caught in the middle.

"Down the line you know that China and the United State are going to be increasingly rubbing up against each other," he says. "The question then becomes if we start becoming a major supplier to China, and the Americans and Chinese do have some sort of conflict, what kind of pressure would Americans bring on us in terms of influencing the policy with China?"

[Ponce]

Remember that China has been buying a lot of sand oil land in Canada......

[palani]

China is also said to have purchased land in Greenland .. for when the polar cap disappears and cargo can bypass the Panama canal by going over the top.

It is a long term investment. Also, it would seem to give them an incentive to increase global warming.

[Cebu_4_2]

Not sure if true but I read all the oil we pump in the US is not sweet crude so we sell it. Our refineries can only work with sweet crude.

Please correct me if wrong.

[freespirit]

not sure about the "sweet crude" thing... couldn't find much info.

my question is, if we are losing all this money by selling below market value to the US, why was this allowed to continue? that makes absolutely no business sense whatsoever!!

to me this is insanity. were it up to me, i would give them the ultimatum that we either negotiate a better price with the US, or stop selling to them altogether. the same sort of thing happens with our softwood lumber...we sell the majority of it to the US, then when we run short on our supply, we buy back from the US our own lumber, at a seriously inflated price. this also makes no business sense. this nonsense really has to stop.

[Dogman]

Not sure if true but I read all the oil we pump in the US is not sweet crude so we sell it. Our refineries can only work with sweet crude.

Please correct me if wrong.

No!

We do refine heavy crude.

Sweet crude is a premium because it is easier to refine. Heavy crude has a lot of asphalt in it. Where do you think all of the asphalt we use on our roads comes from?

Edit: One example

http://www.reuters.com/article/2011/...70P1HJ20110126