For Archival Purposes -- Alberta's Take on North Dakota's Prolific Bakken

Updates

March 22, 2013: no sooner had I posted the article below, suggesting that it was a bit dated, and perhaps not an accurate reflection of what is going on in the oil patch today, than I see the Motley Fool article, same subject, posted today. 

Canada has a problem. While it might have the world's second-largest crude oil source, right now its oil is way too cheap. Before you start to get excited that the price might come down at the pump, I should warn you: The reason that oil is cheap is that its stuck up there. Blame the lack of pipeline capacity to take that oil to the refining marketplace. So, just how cheap is Canadian crude oil you ask? Take a look at the chart below -- see the chart at the link to see the discount Canadian oil is faced with. 

Then read the rest of the article. Motley Fool suggests this situation may not last much longer. 

In case the link is broken, here's the graphic:

Original Post

I wasn't going to post this; I've posted a lot today and need to take a rest, but I thought: if I don't do it now, I will probably forget. The story at the linked article is very, very long. I didn't read it very closely; events are moving too fast for articles even a couple of months old, but for archival purposes, I decided to post it.  Because I read it quickly I may have missed more important story lines, and I may have come to wrong conclusions. Having said all that, it's an article worth reading and archiving.

********************

A reader sent me the link to this article. Note the date of the article: old, but not all that old, just last November, 2012. And since then, not much has changed. Well, actually one thing: the US just denied another huge pipeline, this time the Enbridge Sandpiper pipeline.

From the Alberta perspective, due to  a) prolific Bakken production; and, b) lack of takeaway capacity, Canadian oil sands are in a world of hurt.

“Canada has a real problem,” said Al Monaco, chief executive officer of Enbridge Inc., the pipeline company that has long been the prime mover of Canada’s oil. Combine rising U.S. oil output with declining consumption and the lack of other markets for Canada, and “none of that bodes well for prices if you’re a producer – nor if you’re a government that has royalties at play. Nor if you’re the federal government for tax revenue.”

The Sandpiper pipeline was also mentioned:

Some 235,000 barrels a day of Bakken crude now run through a pair of Enbridge pipelines that connect to the Mainline. That brilliant new pipe near Stanley will help boost the total volume to 395,000 in 2013. By 2016, Enbridge expects to complete construction on Sandpiper, a new $2-billion pipeline that will scoop up another 225,000 barrels a day from North Dakota.

It will be interesting to see if Enbridge re-applies. If not, another huge win for a) rail; and, b) existing pipeline operators. But a huge loss for a) consumers; and, b) operators trying to get their landlocked oil to the coasts.