Why America wants Canadian oil – Part Two

Posted January 24, 2015

A spokesman for Valero Energy Corp., the giant oil refinery operation located on the U.S. Gulf Coast, said there is a specific demand for heavy sour crude because for those able to refine it, “it is significantly cheaper than the benchmark grades of crude oil.”

Most of the heavy sour crude currently being processed at Valero is coming from Mexico, South America (Venezuela) and Russia, with increasing amounts coming from Canada.

“We would rather it came from Canada because it’s closer,” Said Bill Day, director of communications for Valero. “It’s less expensive to transport it, it’s more reliable, a better trading partner, and so forth.”

The U.S. Energy Information Administration data shows the importation of Canadian oil will rise from 3.2 million barrels per day in 2014 to 3.4 million in 2015. The Energy department report projects the demand for Canadian crude will flatten out to as low as 3.28 million barrels per day by 2020 then rise gradually to 4 million barrels per day by 2040.

This projection of increasing Canadian crude shipments is estimated without the benefit of the Keystone XL pipeline that has awaited U.S. government approval for more than three years. In fact, construction of new pipelines in the U.S. is already receiving increasing amounts of crude from Canada.

Does the President of the United States not read these reports supplied by his own officials?

The U.S. “Annual Energy Report 2014” states, “the future increasing demand for diesel fuel increases the value of heavier crude in U.S. Refineries.”

Heavy oil accounts for some 43 per cent of Canadian production and 65 per cent of exports, according to the Association of the Canadian Petroleum Producers. This group says the big growth in energy demand will come from the Southeast Asian nations.

“Our industry needs to have access to where our customers are,” says Tim McMillan, president of the Petroleum producer’s organization.

So where does this leave the government of Canada?

The Finance Minister, and former Energy Minister, Joe Oliver, recently told a Calgary audience that Canadian oil exports to the U.S. will decline over the next few years. He went on to say that it was another reason for Canada to develop the infrastructure – read that pipelines – to move its oil to new foreign markets. Even Prime Minister Harper opined that Canada selling its oil to other markets besides the U.S. would be “the last thing Americans would want to see.”

At the same time, the government endorses the Keystone XL pipeline into the U.S. and supports the Northern Gateway and East Energy pipelines taking oil to each side of the country for export.

It’s called sucking and blowing at the same time.

The Canadian government handling of the whole Keystone issue has been a public relations disaster, with a toxic mix of threats, lying by omission and ignorance of the facts.

How can the Canadian Minister of Natural Resources, Greg Rickford, gush to an American audience in Texas: “Our government welcomes today’s latest milestone, contributing to already historic volumes of Canadian energy being supplied to the United States.”

An accompanying news release stated the new U.S. pipelines will help boost Canadian Oil reaching the Gulf Coast to 600,000 barrels a day from the current 200,000 barrels a day.

It’s hard to understand why the Canadian Minister of Natural Resources fails to read the official data supplied by the U.S Energy Information Administration, projecting Canadian oil imports at 3.4 million barrels this year.

Does Rickford not talk to Oliver or Harper?

Let’s get these choirboys singing from the same page.

Those loyal Tories in Calgary must be cringing with this wind-blown rhetoric that the late Lil Abner would say: “ It’s confusin’ but amusin’, “

 

 

 

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