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World Demand for Heavy Sour Oil Grades is increasing but is Canada missing out due to pipeline roadblocks? – Maureen McCall


PJVA Luncheon Sept 12, 2019

by Maureen McCall

“The call on Canadian heavy sour crude oil—the principal export from the Canadian oil sands—has never been greater as the rapid deterioration of Venezuelan output tightens the supply of heavy sour crude globally.” according to Kevin Birn, VP North American Crude Oil Markets,  IHS Markit in IHS Markit’s Oil Sands 10-Year Production Forecast released in June this year. In the release he also commented…

“Transportation constraints such as a lack of adequate pipeline capacity and the resulting sense of price insecurity in Western Canada have weighed on new large-scale incremental investments in the oil sands.”

In a recent interview with this reporter, Birn elaborated on factors affecting world demand for Canadian Heavy crude that are encouraging and disappointing at the same time for the Canadian energy sector.

“Globally, we have seen tremendous growth in the availability of light sweet crude oil and a contraction in the availability of heavy sour grades.  This has increased the call and value of heavy sour crude oil in Western Canada to the benefit of Canadian producers.  Meanwhile we have seen remarkable reductions in oil sands cost structure, and tremendous growth from Canadian Unconventionals.  While pipelines capacity has managed to grow, it still has been unable to keep up with demand as major pipeline projects have continued to meet delay.”

Are Pipelines the missing piece to growth for the Canadian energy sector and ultimately Canadian prosperity?

For approximately four years now Canadians have watched as plans for pipeline expansions and new pipelines meet with multiple delays and challenges.

Most troubling has been the frustration of four major pipelines — Energy East, Trans Mountain, Northern Gateway and Keystone XL.

In the face of this frustration, a paper published by G. Kent Fellows, Research Associate at U of C’s School of Public Policy, has garnered attention as he suggests a Pan-Canadian, Multi-Modal Corridor may be the correct solution to propose. Why is the timing right?

According to Fellows, there is a shift in long term focus from North-South Trade between Canada & the US to East-West or West-East trade globally.

Yes, he concedes the US is our biggest trading partner, but global development patterns mean that the potential for incremental new trade is much stronger globally from East to West and back rather than from North to South. He asserts the Corridor concept is to facilitate inter-provincial trade and economic development just as much as national development. Fellows feels there is already a high degree of  lost economic development potential due to internal trade costs because Canadians lose a great deal of GDP to internal trade costs, and much of those have to do with inadequate infrastructure.

As an investigation of the opportunities the Corridor concept may create, the Petroleum Joint Venture Association has brought Kevin Birn and G. Kent Fellows together with Alberta’s Associate Minister of Natural Gas, Dale Nally and for a federal perspective, Greg McLean of Criterium Merchant Capital, who has served as an advisor to two Federal Cabinet Ministers – Harvie Andre, M.P. for Calgary Centre and Jean Corbeil, Minister of Transport. 

Attend a panel discussion of “Canada’s Energy Security- Federal & Provincial cooperation and the Energy Corridor approach” with speakers:

Alberta Associate Minister of Natural Gas, Dale Nally,
Kevin Birn-VP, North American Crude Oil Markets, IHS Markit,
Kent Fellows, Research Associate at U of C’s School of Public Policy
Greg McLean CIM, MBA- Criterium Merchant Capital

Thursday September 12th 11:00am to 1:00pm at The Calgary Petroleum Club. Tickets $50.00 and $60.00.

To Register, go to Information & Registration

Sponsored by EnergyNow.ca



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