Experts see positives for Canada's oilpatch if U.S. oil export ban ends

CALGARY - Experts see more good news than bad for Canada's energy industry if the U.S. lifts its decades-old ban on oil exports.

See Full Article

The ban came into force when oil shortages were commonplace 40 years ago - a stark contrast to today's U.S. glut, thanks to fracking in shale formations in Texas and North Dakota.

Congressional leaders have reached a deal on a massive spending bill that includes allowing the sale of U.S. crude in the global market.

Skip York, a vice-president at consulting firm Wood Mackenzie, says lifting of the ban could make it easier for Canadian crude to get to lucrative Asian markets.

Right now, Canadian players need a re-export permit if they want to ship crude to the Gulf Coast and then export it to Asia via the Panama Canal.

York says a policy change would remove that obstacle, but the first choice for Canadian producers is to still to send their crude by pipeline to the West Coast.

Kinder Morgan's Trans Mountain expansion to the Vancouver area is in the thick of the regulatory process, and has faced vocal opposition. Enbridge's Northern Gateway pipeline to Kitimat, B.C., has regulatory approval, but the Liberal government wants to ban tankers along the northern B.C. coast in what many see as a fatal blow to the project.

Given the hurdles Canadian West Coast pipeline proposals have faced, the Plan B becomes more important.

"It eliminates some of the regulatory burden for a Canadian producer who wants to sell into Asia and can't go through a pipeline to the West. They could still transit through the pipelines that connect Canada to the U.S. Gulf Coast and put it onto a ship," said York.

TransCanada Corp.'s (TSX:TRP) existing Keystone system taps into the U.S. Gulf Coast. The Keystone XL leg, which President Barack Obama rejected in November, would have provided a more direct route between Alberta and Texas. Enbridge Inc.'s (TSX:ENB) network also has the ability to connect to the Gulf.

Alan Ross, a partner at law firm Borden Ladner Gervais in Calgary, said it's important to note the differences between Canadian and U.S. crudes. In Canada, it's mostly tough to refine heavy oil whereas the oil flowing out of U.S. shale formations is mainly higher quality light oil.

Gulf Coast refineries are set up to handle heavy crude.

If the U.S. is able to send more of its own crude overseas, "then it may well be that there's more of a demand in those refineries for Canadian heavy to come in," said Ross.

Ross said lifting the export ban could also narrow the price gap between the main U.S. benchmark, West Texas Intermediate, and Brent crude from the North Sea, which fetches a higher market price because it's able to travel around the world by sea.

The higher international price has been a big driver for building pipelines to get landlocked crude to coastal waters.

While there would still be value in those proposals, "if the delta between WTI and Brent is less, then you would view that international access or off-continent access a little bit differently," Ross said.



Advertisements

Latest Economic News

  • Canadian agriculture ministers briefed on trade-war contingency plan

    Economic CTV News
    VANCOUVER -- Federal Agriculture Minister Lawrence MacAulay emphasized the importance of the provinces working together as an escalating trade war with the United States puts some farmers on edge. The minister said his provincial and territorial counterparts discussed trade negotiations and the contingency plan during their conference that wrapped up Friday in Vancouver. Source
  • Teamsters members at CP Rail ratify new contract

    Economic CBC News
    Unionized conductors and locomotive engineers at Canadian Pacific Railway Ltd. have voted in favour of a new four-year collective agreement. Members of the Teamsters Canada Rail Conference (TCRC), which represents about 3,000 workers at CP, voted 64.7 per cent to ratify the new contract. Source
  • Pipeline protesters say they're willing to defy eviction notice

    Economic CTV News
    BURNABY, B.C. - Protesters at an anti-pipeline camp in Burnaby, B.C., say they are ready to defy an eviction notice handed out from the city. The City of Burnaby issued a 72-hour notice to those occupying "Camp Cloud" on Wednesday, but protesters say in a news release that isn't enough time to comply with concerns raised over safety. Source
  • Japan resumes Canadian wheat imports after suspension

    Economic CBC News
    Ottawa says Japan has ended its temporary suspension of Canadian wheat imports. Japan had halted shipments after some unauthorized genetically modified wheat was found in southern Alberta. Ottawa says the decision marks an end to all international trade actions arising from the discovery on June 14. Source
  • Ottawa says Japan has resumed Canadian wheat imports after temporary suspension

    Economic CTV News
    Ottawa says Japan has ended its temporary suspension of Canadian wheat imports. Japan had halted shipments after some unauthorized genetically modified wheat was found in southern Alberta. Ottawa says the decision marks an end to all international trade actions arising from the discovery on June 14. Source
  • 'This is madness': Auto industry warns U.S. lawmakers of dire tariff consequences

    Economic CBC News
    The world's automotive industry gathered in Washington with uncharacteristic unity, to deliver a singular message to American policymakers: If you start a trade war with tariffs on cars, you'll shoot yourself in the foot. The issue that has been gaining steam for weeks came to a head Thursday as dozens of representatives from the industry around the world deliver their remarks at a hearing before the U.S. Source
  • Loonie moves up as inflation ticks higher, TSX ends lower along with U.S. markets

    Economic CTV News
    Stock indexes in Canada and the U.S. closed down Friday on geopolitical tensions, while the loonie surged higher after Statistics Canada said the inflation rate jumped in June. Data from June showed the country's annual inflation rate rose to 2.5 per cent for the month, up from a 2.2 per cent reading in May to hit its highest mark in more than six years. Source
  • Loonie moves up as inflation ticks higher, TSX moves lower at late-morning

    Economic CTV News
    TORONTO - The loonie surged higher after Statistics Canada reported the annual inflation rate in June hit its highest mark in more than six years, while Canada's main stock index lost ground. The Canadian dollar was trading at 76.16 cents US, up from an average value of 75.44 cents US on Thursday. Source
  • Aimia shares surge after it announced Aeroplan program changes in 2020

    Economic CTV News
    MONTREAL -- Aeroplan's parent company received its biggest boost since announcing a change in CEO in April after its shares surged more than eight per cent Friday after it unveiled changes to the loyalty program once its exclusive partnership with Air Canada ends in 2020. Source
  • Boost to Canada Child Benefit comes into effect

    Economic CTV News
    If you are eligible for the Canada Child Benefit program, your monthly payment could soon be increasing. Effective Friday, the federal tax break is being indexed to inflation, which means an increase to keep up with the growing cost of living. Source