Market Currents: U.S. dependency on Middle East crude is rising

[thackney]

Market Currents: U.S. dependency on Middle East crude is rising
http://fuelfix.com/blog/2017/01/23/market-currents-u-s-dependency-on-middle-east-crude-is-rising/

Crude is starting the week by charging lower, as supportive rhetoric from OPEC over the weekend has done little to allay fears of ongoing strong supply this year – especially if OPEC does indeed end production cuts mid-year, and should U.S. production continue to show signs of life. Hark, here are five things to consider in oil markets today.

1) President Trump’s energy plan has been published on the White House website, saying the new President ‘is committed to achieving energy independence from the OPEC cartel‘. This seems an unlikely event, given the U.S. imported well over 3 million barrels per day from the cartel last year, amid joint ventures on the U.S. Gulf Coast with various countries.

Looking at Arab Gulf flows to the U.S. –  also including Oman – imports averaged over 1.8mn bpd last year. Saudi sent nearly 1.1mn bpd, while Iraqi volumes climbed over 430,000 bpd. Even UAE delivered cargoes in half of all months last year. U.S. crude imports are unlikely to be materially dropping any time soon....

[IsailedawayfromFR]

It could even happen that demand picks up in US if economy strengthens, and we could import more.

[skeeter]

It could even happen that demand picks up in US if economy strengthens, and we could import more.

How would bringing the Keystone Pipeline online effect imports?

[thackney]

How would bringing the Keystone Pipeline online effect imports?

More oil brought into the country from Canada would result in less oil brought into the country from overseas.

[Wingnut]

How would bringing the Keystone Pipeline online effect imports?

I'm no expert but wouldn't that just shift the imports coming from the ME to the USA  to being imported from Canada? 

[skeeter]

I'm no expert but wouldn't that just shift the imports coming from the ME to the USA  to being imported from Canada?

I'm no expert either, 'cause I thought the Keystone pipe was simply a mode of transportation of oil from Alaska. Guess I'll need to read up.

[thackney]

I'm no expert either, 'cause I thought the Keystone pipe was simply a mode of transportation of oil from Alaska. Guess I'll need to read up.

The existing Keystone and the proposed Keystone XL pipelines bring oil from Hardisty, Alberta.



The Alaska pipeline ends in Valdez, Alaska ~1,400 miles away.



While the Keystone system connects to other pipelines in Canada, there are no pipelines bringing Alaska Crude into Canada.





Canadian Energy Pipeline Association (CEPA) liquids pipelines map
http://www.capp.ca/canadian-oil-and-natural-gas/infrastructure-and-transportation/pipelines

[skeeter]

The existing Keystone and the proposed Keystone XL pipelines bring oil from Hardisty, Alberta.

Got it. Thanks for the info.

Interestingly Canada has the world's third largest proven petroleum reserve.

[dfwgator]

We're working on it.

[thackney]

Interestingly Canada has the world's third largest proven petroleum reserve.

That is because the bitumen in the oil sands has become economical to produce with methods like steam assisted gravity drain (SAGD) and can now be counted as reserves.

[Bigun]

Here is another little piece of information for you to consider.

We are buying some of this oil already.  It is being transported by train and truck.  The pipelines will get it here about a million times more safely!

[Wingnut]

Here is another little piece of information for you to consider.

We are buying this oil already.  It is being transported by train and truck.  The pipelines will get it here about a million times more safely!

A fact totally ignored by obtuse tree hugging liberals.

[Bigun]

A fact totally ignored by obtuse tree hugging liberals.

Why do you suppose that is?

[Wingnut]

Why do you suppose that is?

I didn't know there was going to be a test today!  Damn you Bigun!!

[catfish1957]

More oil brought into the country from Canada would result in less oil brought into the country from overseas.

Exactly.  Would love to know how much oil money actually gets funneled into radical Islamic activities.

XL + $40/bbl oil =  cash strapped camel jockies

[Bigun]

I didn't know there was going to be a test today!  Damn you Bigun!!

OK! That wasn't fair so let me do it this way. 

Is it possible that the environment is not the real issue?

[thackney]

Here is another little piece of information for you to consider.

We are buying this oil already.  It is being transported by train and truck.  The pipelines will get it here about a million times more safely!

Not all of it already.  It is capacity for future production.

Import by truck is negligible.  Current total rail imports are a fraction of the Keystone XL capacity.


(1 cubic meter equals = 6.29 bbl,  6,455,923 m3/yr = 111,254 bpd)
)

[Bigun]

Not all of it already.  It is capacity for future production.

Import by truck is negligible.  Current total rail imports are a fraction of the Keystone XL capacity.


(1 cubic meter equals = 6.29 bbl,  6,455,923 m3/yr = 111,254 bpd)
)

OK!  Thanks!  I'll go back and modify my post to include the word "some".

[catfish1957]

OK! That wasn't fair so let me do it this way. 

Is it possible that the environment is not the real issue?

Why do you think Warren Buffett was lobbying Obummer so strongly to squelch the pipeline?

That BRK.A $5B stake in rail might have something to do with it.

[IsailedawayfromFR]

How would bringing the Keystone Pipeline online effect imports?

Should increase imports, as the Keystone pipeline transports primarily Canadian oil.

If you are talking about imports from ME, then it is likely to reduce those, I would think, as oil to feed the GC refineries would more likely come from Canada rather than from overseas.

[Bigun]

Should increase imports, as the Keystone pipeline transports primarily Canadian oil.

If you are talking about imports from ME, then it is likely to reduce those, I would think, as oil to feed the GC refineries would more likely come from Canada rather than from overseas.

Maybe!  A lot depends on what the refiners can deal with I would say.

[IsailedawayfromFR]

Got it. Thanks for the info.

Interestingly Canada has the world's third largest proven petroleum reserve.

Be careful batting around the word "reserve".

Most of the time this refers to 'proved' reserves, and that means there is a commercial test implicit to ascertain if the oil that can be produced from the ground is not only technically feasible, but economically so.

When it comes to the oil in Canada, the oil is of such poor quality and has such high extraction costs, that it is very likely right now that a lot of what was considered 'proved' is no longer so.

A lot of times, the "reserve" is not proved, but in some riskier category called unproved. 

There is a lot more unproved oil out there than proved.

Bottomline is that Canada has a whole lot of reserves, but most are in the unproved category.

[IsailedawayfromFR]

Maybe!  A lot depends on what the refiners can deal with I would say.

Most of the refineries in this country were retrofitted years ago to deal with lower API gravity crude as the long-term view was that was the poorer quality crude that would be produced after the better quality crude gets depleted.

A lot of this crude came from Venezuela which has some of the poorest crude in the world.

Ironically, the refineries were not prepared from the tremendous abundance of higher gravity crude coming in from US unconventional fields, so they are actually looking for some lower gravity crude to satisfy the refinery input requirements, hence the need to import Athabasca's low gravity crude via Keystone.

[Bigun]

Most of the refineries in this country were retrofitted years ago to deal with lower API gravity crude as the long-term view was that was the poorer quality crude that would be produced after the better quality crude gets depleted.

A lot of this crude came from Venezuela which has some of the poorest crude in the world.

Ironically, the refineries were not prepared from the tremendous abundance of higher gravity crude coming in from US unconventional fields, so they are actually looking for some lower gravity crude to satisfy the refinery input requirements, hence the need to import Athabasca's low gravity crude via Keystone.

OK! Thanks for the info!  I've been out of the loop for longer than I thought apparently.

[IsailedawayfromFR]

OK! Thanks for the info!  I've been out of the loop for longer than I thought apparently.

Well, the refiners may be more nimble than when I am giving them credit for.  I was in upstream, not downstream, but did a lot of work alongside them.