Quote:
Originally Posted by vintagetoppsguy
I don't have the answer, but I can speculate. Canadian oil has heavy sands. It is more time consuming to refine, it pollutes the environment (air and freshwater) 3X more than conventional crude, and it's more harsh on the process equipment because of the abrasiveness. All around, it's more costly to refine. Again, I don't know if that's the reason or not, but I imagine that has a lot to do with it.
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For the last 10 years, and the next 3 months, I've been in the pipeline industry. I remember a few years back, my employer was sending railcar loads of Y-Grade NGLs from East Texas up to Canada to dilute the tar sand oil so they could actually get it viscous enough to move down a pipeline. It is nasty stuff.
A couple of related thoughts. First, a slight peeve of this pipeliner: President Biden did not cancel the Keystone pipeline, which has been in service since 2010. He canceled Keystone XL, which is duplicative of Keystone. KXL was a more direct route and was problematic from the start, since it went through the heart of the Oglala aquifer. Sometime in 2017, I was visiting the Welspun pipe mill in Little Rock and there was acre after acre of whitewashed KX pipe sitting in outside the mill. You could actually see it in satellite photos.
As others have pointed out, canceling KXL has little to do with current prices. Nor does a ban on drilling in federal land, where less than 10% of the US production originates. The Russia situation is contributing, but there is a bigger gorilla in the room. As of yesterday, there was 663 rigs operating in the US. As recently as December 2014, there were over 1900 rigs operating. And, between 2017 and 2019, the count was consistently over 900 to 1000. There is theoretically the ability to increase US production. The question is what exactly is impeding it. My more financially inclined friends tell me that shale production has never produced the promised return. Whether we are seeing increased capital discipline on the part of production companies or less willingness on the part of Wall Street to write blank checks for drilling is above my pay grade. But, it does appear there is some structural issues in the industry unrelated to the changing political winds.
And because every thread needs a card.
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