Canadian Crude Supply Growth Highlights Need for New Pipeline
http://oilpro.com/announcement/4733/canadian-crude-supply-growth-highlights-need-new-pipeline4/18/2017
Western Canada may see a supply increase of nearly a million barrels of crude by 2020, putting increasing pressure on an already constrained pipeline system that has struggled with delay in bringing incremental pipeline capacity online, says a new report by IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions.
Entitled Pipelines, Prices and Promises: The Story of Western Canadian Market Access, the Canadian Oils Sands Dialogue report from IHS Markit examines the relationship between pipelines and prices, the implication of delay in new pipeline capacity that has occurred in western Canada and the current outlook for the industry.
Absent new pipeline takeaway capacity, Canadian crudes will face limitations from the existing pipeline infrastructure as Western Canadian volumes continue to build, the report says.
“The need for new pipelines departing Western Canada has not diminished with lower oil prices, quite the opposite,” said Kevin Birn, energy director for IHS Markit, who leads the Oil Sands Dialogue. “Canada remains a growth story with production volumes increasing since the oil price collapse. And with continued growth it appears inevitable that volumes will overtake an already-constrained system and create a resurgence of crude-by-rail.”
The report notes that transportation costs are a key reason why oil prices differ between regions. While quality differences—such as light versus heavy oil—result in price differences between different types of crude oils, transportation costs contribute to price differences between regions for crude of the same quality....
