Posted on 03/04/2006 5:03:39 PM PST by wjersey
Canada has been showered with attention for its oil sands deposits of thick, sludgy crude in remote parts of northern Alberta but until now most of that oil has flowed only as far south as Chicago.
This week, crude spun out of Canada's oil sands came all the way to this flat Oklahoma prairie town that's known as the oil pipeline capital of the world.
Enbridge, a Calgary-based oil delivery and storage company, opened the taps to its Spearhead Pipeline, a 650-mile stretch of steel from Chicago to Cushing, and the first western Canada crude sloshed into the company's mammoth Cushing terminal early Thursday.
The moment was more than two years in the making for Enbridge, which is rapidly expanding its Cushing terminal with new storage tanks that will add another 3.5 million barrels of oil space to the 10.3-million-barrel capacity it already has.
Enbridge completed four new 575,000-barrel storage tanks in 2005.
While oil flowing through an underground pipeline may seem mundane, the $190 million Spearhead project has special significance.
That's because Enbridge reversed the flow of the Spearhead pipeline, which is also something of a reversal of fortunes.
For years the pipe, which used to be owned by BP, carried Gulf of Mexico crude to northern markets that needed the oil. But as the Gulf slowly but surely plays out, and Canada's oil sands production picks up steam, the crude is flowing in a different direction.
It's a sign of the times. Canada, which is already the biggest exporter of oil to the U.S., outranking Mexico, Venezuela and Saudi Arabia, will likely double its oil production in the next decade, thanks to production from the oil sands.
"For us pipeliners, seeing this fresh steel and new tanks in the ground really gets the blood flowing," said Richard Bird, Enbridge's vice president of li- quids pipelines.
Energy analyst George Morris of Petrie Parkman called 2005 and 2006 the years of the pipeline, saying they are the key pieces of the oil sands puzzle.
"The big issue is where you're going with the crude," Morris said. "It's pipelines. It's refining. How is the market being locked up?"
On the same day Enbridge delivered the first oil sands crude to Cushing, Chevron announced it had acquired five oil leases in Alberta containing 7.5 billion barrels of crude.
Other energy players, from Exxon Mobil and Royal Dutch Shell to Suncor and China's state-owned Sinopec, are rushing to expand operations in the oil sands. But it was the refiners that contracted for space in Enbridge's Spearhead system, including ConocoPhillips and Frontier Oil.
Exxon Mobil is also working on a pipeline reversal that would bring Canadian crude down to Gulf Coast refiners instead of flowing Gulf oil north to Midwestern markets.
Rick Sandahl, Enbridge vice president of market development, said more pipeline reversals between Canada and the Gulf Coast are inevitable.
"Without question. If you have existing pipes that are not fully utilitized, then it's making more and more sense," he said.
Bird said the Spearhead line, which has an initial capacity to transport 125,000 barrels of oil a day, can be expanded easily.
Ratcheting up the pumping power in the existing pipe could boost capacity to 190,000 barrels a day. Enbridge also has second-stage plans to loop the pipe building another line alongside the existing one that would add another 100,000 barrels a day.
Greg Stringham, of the Canadian Association of Petroleum Producers, said the oil sands' potential to supply not only the U.S. but also Asia is enormous.
Once crude production from the oil sands hit 1 million barrels a day in 2004, the world started to take Canada seriously, he said.
"With the exception of Saudi Arabia and the Russians if they get their act together we're the only one to grow when everyone else is flat or declining," he said.
Obviously we will "mine" our own tar-sands when we need them. In the meantime let's "mine" Alberta's. There are also oil shales in vast abundance, and coal.
Extremely messy stuff to work with and extremely expensive to extract.
And the process to convert coal into gas becomes economical when oil is at at $30/bbl. Pennsylvania's got a pilot plant going
Yes! The Canadian Wing Nut Liberals wanted this NOt to happen for so long, and even placed an oil export tax on Alberta oil.
Now oil is up enough to export, pay the Canadian Fed Export tax, AND make a profit.
I love it when Canadian Socialist Liberal Wing Nut isolationist policy is traduced by capitalism!!!!
If our enviro-nazis have managed to keep ANWAR, the Pacific Coast and the Florida coast out of production, I'm sure they'll frighten enough spineless Congressmen to oppose bringing in the US oil sands. Canada will be able to put OPEC out of business, though, and that will be great! I hope the east and west coasts have to pay $5/gal. for this new oil. It would serve them right.
How can this be? Canada signed Kyoto - it should be one of the cleanest nations in the world!
Kyoto in Canada has been nothing but hype, yeah they ratified it, but they haven't done much about it other than stupid TV commercials with the Canadian version of Jon Stewart in them.
The problem with the natives is, a hundred years ago they were granted land in the middle of nowhere. They don't inhabit it, they probably couldn't find it on a map. But the second anyone wants to run road, rail or pipe across it, you would think it had been a sacred site since the big bang.
Good. I own Enbridge stock.
We really need to try to trade New England for Alberta.
And this deal completely bypasses Louisiana, by the pipeling going into Oklahoma, how long before somebody pulls the race card????bwahahahahaha!
Well...everyone wants to get into the act, eh ?
Sounds like they need a casino.
If we combine oil shale/oil tar sands plus modern coal liquefaction and oil-laden algae production, we could essentially eliminate all oil imports and North America could even end up being an oil exporter in the 21st Century. OPEC would instead end up being the world's latest natural gas producer as petroleum gas now being burned off in the Persian Gulf and in Nigeria are instead liquified and pumped on trancontinental pipelines to LNG terminals on the northern coast of Africa and Lebanon/Syria to be shipped to Europe via LNG tankers.
What I have heard is a combination of limited reserves of the sand variety and massive ammounts of the shale that is not presently economically recoverable. The Oil Shale is a literal as you can take the squeezing blood for a stone metaphore.
If the U.S. is oil independent, then the price of crude will fall dramatically. This will put the U.S. drillers out of business (think minimum wage laws and the cost of enviromental compliance)and then the cycle begins all over again.
I bought into Enbridge Partners in 1993. It has put off at
least a 7% annual dividend since and is up 91%.
That would be real, real nice!!
(Pray for nuclear fusion power)
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