As much as we try to keep up to date on the business of bitumen, it is not because we want to report every dip and dive in the industry. Far from it. The problem is keeping track of what the tar sands exploiters and their public relations people at the Canadian Association of Petroleum Producers (CAPP) are calling their product this week.
I sort of hoped that they would stick with ‘Western Canada Select’ but everyone knows that is just bitumen. They keep trying to call it ‘western crude’ or ‘heavy crude’ but nobody is sure what that is these days. All we know is that it fetches about $50 a barrel less than real crude oil from American fracking or the Middle-East.
And no, there is no joy in Alberta with discounted bitumen selling at less that $15 per barrel.
At current prices, it is hard to understand why any of these well-heeled companies would want to stay in the bitumen business for too long. It is so bad that they actually met as an industry with the Alberta government, in the person of the premier, to discuss possible solutions.
Some of the companies actually pressured the province to order them to curtail operations and reduce production by about 10 per cent across the board. The companies pushing this included heavy hitters such as Canadian Natural Resources, Cenovus Energy and Nexen Energy. The problem is that integrated companies such as Husky, Imperial Oil (ExxonMobil), Shell and Suncor are making substantial profits from the bitumen as they own the refineries and retail operations that can use the low-cost bitumen product. The only problem these companies face is getting their bitumen to the refineries—and the pollution their refineries are causing.
Listening to both sides left the Solomon-like premier with no option but to suggest that she would see if she can buy some more rail cars to carry the tar sands product to market.
But the situation of the non-integrated bitumen producers reminded me of the old story of the Prairie wheat farmer. His wife ran off with a pedlar, his daughter married a socialist, his local grain elevator burned down and nobody would buy his wheat. A CBC reporter asked him what he was going to do. The farmer thought about it and finally said, “I guess I’ll just go to the Gulf Coast of Florida this winter.”
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Copyright 2018 © Peter Lowry
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