Canada-Texas pipeline, one step closer

[Ray,IN]

Originally Posted by gonzo136

It would seem to me to be a lot more cost effective to build a refinery close by. The only reason I see too build a pipeline to a port city is so that you can export it.

Tony G.

I agree with this reasoning, build a new state-of-the-art refinery in the Dakotas or Montana. Piping crude to the TX coast is very convenient for exportation.

[RickO]

Originally Posted by Ray,IN

Piping crude to the TX coast is very convenient for exportation.

I'm beginning to understand

Rick

[Elkhartjim]

Originally Posted by Ray,IN

I agree with this reasoning, build a new state-of-the-art refinery in the Dakotas or Montana. Piping crude to the TX coast is very convenient for exportation.

I'm curious, just where are we exporting crude? I've seen thousands of tankers come in setting low in the water (because they are full of crude from the middle east) but I've never seen one leave setting low in the water. Maybe I'm missing something unless you're talking about us exporting finished product.

[Dixieray53]

Originally Posted by Elkhartjim

I'm curious, just where are we exporting crude? I've seen thousands of tankers come in setting low in the water (because they are full of crude from the middle east) but I've never seen one leave setting low in the water. Maybe I'm missing something unless you're talking about us exporting finished product.

We export tons of oil...maybe to Canada and then import it as gasoline..
Take a look at these stats. D

U.S. Exports of Crude Oil and Petroleum Products

[RustyJC]

A question was raised earlier in this thread about the anomaly of dropping prices of some crude oils while gasoline prices have not dropped to the same extent. The following is an excerpt from an ARTICLE in the Houston Chronicle this morning regarding the Keystone XL (Canadian Tar Sands crude oil) pipeline:

The Keystone pipeline is designed to bring oil from the Canadian oil sands in northern Alberta to Gulf Coast refineries. At the moment, most Canadian heavy crude, or bitumen, goes to Midwest refineries, which have more of the stuff than they can use.

There’s no good way to get the oil to refineries in other parts of the country in the current pipelines. The result has been a pricing anomaly in West Texas Intermediate crude, in which oil prices have fallen relative to other world crude such as Brent. In the United States, that has resulted in gasoline prices remaining higher than they typically would be given the price for West Texas crude.

That’s because coastal refineries are paying higher prices for imported crude, or domestic crude pegged to international prices. The Keystone pipeline would help balance the crude supplies.

“That will result in lower refined product prices from the Gulf Coast,” said Craig Pirrong, a finance and energy markets professor at the University of Houston who also writes the Streetwise Professor blog.

Regarding the posts immediately above, as has been pointed out many times, the U.S. exports diesel fuel to Europe and imports gasoline from European refineries. This is due to the supply and demand imbalance - diesel is much more in demand in Europe as it is a favored fuel there, and some 50% or so of light vehicle sales are diesel-powered vehicles, so Europe is awash in gasoline that it can't use. Basically, we swap diesel fuel for gasoline that is more in demand in the U.S.

Rusty

[JBDISCOVERY]

This is great news for the USA. We need to get our own supplies of oil. North Dakota is just jumping. New wells, new drilling, new pipelines, and lots of new workers making this possible. DRILL BABY, DRILL. (mod edit: political)
JB

[blackf3504dr]

Originally Posted by JBDISCOVERY

This is great news for the USA. We need to get our own supplies of oil. North Dakota is just jumping. New wells, new drilling, new pipelines, and lots of new workers making this possible. DRILL BABY, DRILL. (mod edit: political)
JB

I'm getting e-mails from Schneider National (trucking co.) looking for truck drivers to service the oil fields.

[Dave and Jaime]

Originally Posted by RustyJC

As difficult as it is, I'm going to ignore your price gouging comment for this 5 minutes and attempt to respond to those who might want objective answers to your question. Refinery location has more to do with the following factors:

Use of capital: If I'm not capacity limited in my Gulf Coast refinery, and the intent is just to replace imported oil coming in on tanker ships with Canadian tar sands oil coming in by pipeline, why would I want to invest the capital to build a new refinery when I have existing refineries that are perfectly capable of processing the new source of feedstock?

Feedstock supply flexibility: Refineries on the Gulf Coast can obtain their feedstock from any number of domestic and international sources via pipelines and barge/tanker berths. I'm not going to be very likely to build a refinery in the middle of nowhere that only has one source of feedstock that is non-traditional and extremely price-sensitive (when crude oil prices drop, Canadian tar sands production is economically non-competitive because of the higher costs per barrel to extract the syncrude) and thus subject to supply disruption.

Product distribution: There are channels of distribution to market from existing refinery locations. These include product pipelines to the northeast and midwest markets, barge distribution through the Intracoastal Waterway, up the Mississippi and Ohio rivers to the midwest, rail service via tank cars, etc. If you built a new refinery in the middle of nowhere, how are you going to get your products to market? You would have to build a whole new infrastructure system to distribute them.

NIMBY: The same individuals who say they want more refineries unfortunately are all too often the first to say "...but Not In My Back Yard!!! "

There are other factors we can discuss, but the ones above are some of the major ones.

Rusty

Thanks, Rusty, for adding some actual objective facts to the discussion. Sometimes the obvious question (why not build the refinery near in north) does not have an obvious rebuttal to the layperson. But you have really nailed this one.

[blackf3504dr]

My only concern is we won't realize a great deal of "end product" from the pipe line. I remember the same hype when the Alaskan pipe line was being built and how it was going to ease our dependence on foreign oil ... Here we are almost forty years after the completion of that pipe line and still at the mercy of oil producing countries that don't particularly like us.

[Ann n Gene]

blackf, I think you are forgetting an obvious reason the imports keep climbing, actually there are several. First, production in the lower 48 has been on the decline for a lot of years, secondly, demand goes up every year. The amount of oil coming from the Alaskan pipeline can not make up for those two factors alone. Add to that our reluctance as a nation to drill near our own shores, in many wilderness spots and our environmental requirements which are by far the toughest on the planet it all adds up to we still have to import a great deal of oil, at least for the forseeable future.

[Meandering Retiree]

Don't hold your breath on this one. The pipeline from Canada runs across 20 acres of our farm. People from the pipeline were here two years ago and paid us for the right to replace the original line (1935). We took what they offered, but some guys north of us refused to even deal with them...the pipeline is now on hold and may well be fought out in the courts.

[Meandering Retiree]

AK oil is being sold to countries on the Pacific Rim and has been since the early 90s. I had to explain this to my Repr. since he did not know this. He had one of his flunkies call me for information....scary thought that he did not know where our oil was going.

[Steve Ownby]

The Alaska pipeline has a design capacity of 2 million barrels of crude daily. it is currently carrying 600-800,000 barrels daily. It has not approached its capacity in years.[Moderator Edit]

[blackf3504dr]

Well one thing is clear. We are headed for higher and higher fuel prices as long as we continue relying on others for our crude supplies. We as a nation have been dragging our feet and have no clear direction when it comes to "oil independence" or anything close to that.