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Unconventional oil not delivering promised U.S. energy security — Transition Voice
Unconventional oil not delivering promised U.S. energy security — Transition Voice. (source)
Critics of TransCanada’s Keystone XL project often argue that Canada should reap the full benefits of its natural resources, rather than exporting its petroleum riches south of the border. Head to the U.S. and, ironically, you can hear the same discussion. Much of America’s new found oil wealth is being shipped abroad, which is worrying Americans who figured they had a Made-in-the-USA solution to the country’s energy needs.
Since 1975, U.S. federal law has banned raw crude from being exported in the interests of national energy security. The legislation, however, doesn’t cover refined products, such as gasoline or diesel. American refineries are free to export as much refined product as they can sell. And these days that’s a lot.
Refineries in the U.S. are shipping record amounts of gasoline around the world, exporting the fruits of the country’s shale revolution to some of the same countries that not long ago were relied upon for crude supply. Tankers full of gasoline and diesel fuel — made from shale oil pulled out of places such as North Dakota and Texas — are being shipped to the Middle East, South America (including Venezuela), Nigeria, and the rest of West Africa.
Added up, the U.S. shipped a record 3.2 million barrels a day of gasoline, diesel, and other refined products in September, according to the U.S. Energy Information Administration. That number is nearly 65 percent more than the U.S. was shipping in 2010, before the shale revolution took off in earnest. Three years ago, the U.S. was a net importer of gasoline and other refined petroleum products. Today, it’s a net exporter.
It’s easy to see why. Refiners in the U.S. are enjoying the double-barreled advantage of soaring home-grown oil supply and domestic gasoline demand that continues to limp along with the country’s tepid economic growth. The ban on crude exports, originally adopted following the OPEC-inspired energy shock, has effectively turned into a subsidy for U.S. refiners. The millions of barrels of oil being pulled out of new shale plays has nowhere to go.
In Canada, the dynamics of North America’s oil market led to what’s not so affectionately known as the bitumen bubble. A glut of oil in the U.S. Midwest caused bitumen from Alberta’s oil sands to trade as much as $50 a barrel below the going rate in the rest of the world. The price of benchmark U.S. crude, similarly, is trading at a discount to world prices of anywhere from $10 to $25 a barrel.
With that kind of price advantage on feedstock, U.S. refiners have rarely had it so good. European refineries, in contrast, are taking it on the chin. Not only are they paying world prices for oil, but their traditional business of exporting surplus gasoline to the U.S. is shrinking and they’re rapidly seeing their product get displaced in other markets, such as Africa, by cheaper gasoline from the U.S.
American motorists may well be wondering when they’ll share in the boom times from the shale revolution. Despite record gains in domestic oil production, U.S. drivers are still paying more than $3.30 a gallon to fill up. U.S. oil production is up by 2 million barrels a day since 2011, so why aren’t pump prices falling to two bucks a gallon? The answer, of course, is all that U.S.-made gasoline now being burned offshore.
Shipping hundreds of thousands of barrels a day around the continent by rail comes with clear worries for public safety, as well as the environment, that are already being realized. The logic behind the continued expansion of oil-by-rail is tested even further given how much of that rail traffic ends up at coastal refineries that process the crude into gasoline for drivers in the Middle East, Venezuela and Nigeria.
The political cover of North American energy security is allowing Big Oil to frack and drill as fast as it can. Isn’t it worth asking who’s really benefiting from the shale revolution?
– Jeff Rubin, Jeff Rubin’s Smaller World
Canadian Natural cuts production after gas-pipeline rupture | Canada | Reuters
Canadian Natural cuts production after gas-pipeline rupture | Canada | Reuters. (source)
Canadian Natural Resources Ltd said on Thursday it has cut production at its 115,000 barrel per day Horizon oil sands project and its Woodenhouse heavy oil operations after natural gas supplies were cut following a rupture on TransCanada Corp’s Nova regional natural-gas pipeline network.
Canadian Natural said in an email that production has been reduced following the incident on TransCanada’s 1.6 billion cubic foot per day North Central Corridor pipeline, which delivers gas to the Athabasca oil sands region.
Related articles
- TransCanada says gas pipeline in northern Alberta may have ruptured (business.financialpost.com)
- TransCanada Pipeline Leak Being Investigated (olduvaiblog.wordpress.com)
- TransCanada says two customers still lack gas after pipeline rupture in northern Alberta (business.financialpost.com)
- TransCanada pipeline rupture forces oil firms to scale back production (theglobeandmail.com)
- Some Injured and Many Dead in Delta Gas Pipeline Explosion (etcetera9ja.wordpress.com)
TransCanada Pipeline Leak Being Investigated
TransCanada Pipeline Leak Being Investigated. (source)
CALGARY – Service on a natural gas pipeline that feeds oilsands producers in northern Alberta has been mostly restored after being disrupted by a leak.
“TransCanada (TSX:TRP) has confirmed that its response personnel successfully isolated the pipeline break section that occurred earlier (Thursday) on our North Central Corridor system, and has now resumed delivery of natural gas to most of its industrial customers in the area,” said spokesman Shawn Howard.
“TransCanada will be working with its remaining customers to restore full service.”
Howard said a drop in pressure on the line, 140 kilometres west of Fort McMurray, was detected about 2:50 a.m. Thursday.
At least one oilsands producer in the area was affected by the leak. A Suncor spokeswoman said its operations have been slowed, but that it was too early to say by how much.
No public safety threat was expected from the leak in the 92-centimetre-wide pipe. It carries sweet gas, which is low in poisonous hydrogen sulphide.
The nearest residence is about 50 kilometres away. Although a work camp is a couple of kilometres from the site, it was not evacuated.
“Natural gas, particularly sweet natural gas, does tend to dissipate quite quickly into the atmosphere,” said Rebecca Taylor, spokeswoman for the National Energy Board.
“You wouldn’t see pooling of product on the ground.”
First Nations in the area were notified of the leak, she added.
A spokesman for the Transportation Safety Board said the agency was aware of the leak and was following up with the company to gather more information. No decision had been made by Thursday afternoon to send investigators.
Howard said the cause of the line break is not yet known and will be determined during a subsequent investigation.
Energy board investigators were on site.
Related articles
- TransCanada investigates natural gas pipeline leak in northern Alberta (globalnews.ca)
- Pipeline shut down after natural gas leak detected near Fort McMurray (calgaryherald.com)
- TransCanada says gas pipeline in northern Alberta may have ruptured (business.financialpost.com)
- TransCanada Expects U.S. Decision on Keystone XL by End of March (bloomberg.com)
- TransCanada says pipeline may have ruptured (mining.com)
- TransCanada pipeline rupture forces oil firms to scale back production (theglobeandmail.com)