Oil­patch fears de­lays as U.S. judge or­ders more study of pipe­line route

The Western Star - - CANADA -

Po­ten­tial de­lays in the com­ple­tion of the Key­stone XL pipe­line fol­low­ing a U.S. judge’s or­der mean that Western Cana­dian oil pro­duc­ers could suf­fer cur­rent price dis­counts for a longer pe­riod of time, an in­dus­try spokesman says.

On Wed­nes­day, U.S. District Court Judge Brian Mor­ris or­dered ad­di­tional en­vi­ron­men­tal study of the al­tered route through Ne­braska for Tran­sCanada Corp.’s pro­posed pipe­line.

The po­ten­tial set­back il­lus­trates how dif­fi­cult it has be­come to re­lieve mar­ket ac­cess woes that have re­sulted in larger-than-usual price dis­counts for Western Cana­dian crude, said Chris Bloomer, CEO of the Cana­dian En­ergy Pipe­line As­so­ci­a­tion.

“We need the pipe­line, we need it yes­ter­day and we need more mar­ket ac­cess across the board,” he said in an in­ter­view.

“We’re not get­ting a fair price for our crude in the U.S. be­cause of a lack of ca­pac­ity. That’s just fun­da­men­tally an is­sue.”

The dif­fer­ence be­tween Western Cana­dian Se­lect and New York bench­mark West Texas In­ter­me­di­ate crude was about US$25 per bar­rel on Wed­nes­day, down from peaks over US$30 ear­lier this year but higher than his­toric av­er­ages in the mid-teens.

Crude-by-rail ex­ports from Canada reached an all-time record high of 199,000 bar­rels per day in May, up from about 131,000 bpd in May 2017, de­spite higher costs and a poorer safety record than pipe­line ship­ments, Bloomer pointed out.

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