The Globe and Mail reports in its Tuesday edition that discounted prices for
heavy crude from
Alberta's oil sands look set to sink
further, thanks to hundreds of
thousands of barrels of new supply.
A Reuters dispatch to The Globe reports that current in situ bitumen supply
is estimated at between 1.3 million
to 1.4 million barrels a day. Non-upgraded bitumen supply is
expected to rise by 200,000 b/d in
2016 and by another 110,000 b/d
in 2017, RBC said earlier this year. Canadian
producers have some of the
highest cost structures among
those in North America, so
limited pipeline space to deliver
that crude will hurt profits.
The main pipelines carrying
heavy oil into the United States Midwest,
including the Line 4 and 67 part
of Enbridge's Mainline system,
as well as TransCanada's Keystone pipeline, have little to no space for additional
barrels.
The impending squeeze is reminiscent
of 2013, when Alberta's
government was forced to borrow
billions to cover a drop in revenue
due to the so-called "bitumen
bubble," a term coined as a
result of the province's inability
to move oil-sands-derived bitumen
to export, although WCS
prices hovered closer to $40 (U.S.) a
barrel discount then.
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