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One Cost of the Keystone XL

Discussion in 'Too Hot for Swamp Gas' started by G8trGr8t, Sep 19, 2023.

  1. Sep 19, 2023 #1
    G8trGr8t

    G8trGr8t Premium Member

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    Canadian oil will now be shipped west for export on CO2 belching tankers, prior to refinement, to oil markets in China, where it will be refined at refineries that get their energy source from coal belching power plants and have none of the environmental requirements that the US refiners on the gulf coast that get theri power from nat gas do.

    In exchange, it is anticipated that oil prices in the US will now go up. all easily foreseen impacts when the decision to kill the XL was made for political purposes only.

    Go team

    Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices (msn.com)

    CALGARY (Reuters) - Canada's Trans Mountain oil pipeline expansion (TMX), which will nearly triple the flow of crude from Alberta to Canada's Pacific Coast beginning early next year, will shake up North America's supply by diverting barrels now mainly delivered to refiners and exporters in the U.S. Midwest and Gulf Coast.

    Its startup could add as much as $2 per barrel to prices paid by U.S. Midwest oil refineries that sit along Canada's existing main oil-export route. Plants that benefited from discounted oil include those operated by BP, Citgo Petroleum, Exxon Mobil and Koch Industries' Flint Hills Resources, analysts said.

    "They will be competing for barrels that no longer transit through their region," said a Calgary-based oil trader. "The market will have to reshuffle." The long-delayed and controversial Canadian government-owned C$30.9 billion ($22.81 billion) TMX project is set to begin shipping crude early next year, although it could face up to nine months delay due to a last-minute proposed route change.

    Once it starts operating, Canada will be able to ship an extra 590,000 barrels per day (bpd) to Pacific ports for delivery to U.S. West Coast and Asia refiners, where demand for heavy sour crude is expected to climb in the longer-term.
     
    Last edited: Sep 19, 2023
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  2. Sep 19, 2023 #2
    demosthenes

    demosthenes Premium Member

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    I think there’s a decent amount of hyperbole surrounding both pipelines. The trans mountain pipeline has been there for 70 years and this is an expansion project that has nothing to do with the Keystone XL pipeline (another expansion). The trans mountain expansion was first proposed in 2012 for the express purpose of delivering more oil to Asia and construction began in 2019 on the expansion.

    I don’t know all the economics but I find that $2 per barrel claim suspicious. Why? Because that’s the figure the Keystone XL pipeline was going to benefit Canadian oil producers due to lower transportation costs. That would not have resulted in fuel savings for the US as it would be pocketed by Canadian oil producers. Further, the vast majority of oil from the Keystone XL was going to be sent overseas anyway. So what are we really talking about? Marginal employment gains from a noxious oil refining industry? Keep in mind, the US is a net petroleum exporter.
     
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  3. Sep 19, 2023 #3
    WC53

    WC53 GC Hall of Fame

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    We were never going to process Canadian high sulfur crude, no reserve capacity, it was always going to be shipped. There was talk years ago of adding capacity, but it was cheaper to ship. Stock prices you know.
     
  4. Sep 19, 2023 #4
    G8trGr8t

    G8trGr8t Premium Member

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    As I understand it, the transmountain expansion was not moving forward until the XL got killed as the economics didn't make sense.
     
  5. Sep 20, 2023 #5
    demosthenes

    demosthenes Premium Member

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    I think there was uncertainty around the XL since it was killed once before; however, the XL pipeline was approved to move forward by the Trump administration for two years before the TMX was finally approved and broke ground. Like the XL, it was delayed due to a ton of environmental delays, lawsuits and approvals.
     
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