One man’s pain is
another man’s pleasure is how the saying goes. Today, even that can be
rectified to one country’s pain being another’s pleasure. There has been a
dramatic rise in crude oil and natural gas production in the U.S. This accounts
for a strengthening oil/natural gas sector for our neighbors to the south but
fails to bring us similar auspicious news. U.S. oil exports have hit nearly
268,000 barrels per day in April. Almost all of this astronomically high number
goes to Canada. Production in America is disrupting long-established trade
flows inside Canada as Alberta producers are increasingly finding themselves competing
for, and in most cases loosing, market share to the neighboring petroleum
suppliers.
According to the Financial Post, U.S. exports of crude
oil to Canada are the highest levels in 15 years. In western provinces, for
instance, petroleum suppliers are losing customers domestically within their
own home provinces. Naturally, an influx in Canada’s crude exports to America
has increased Alberta oil’s hunt for new markets, as businesses are now seeking
to cut their dependence on local buyers. On a brighter note, companies here in
Canada are moving into energy-intensive industries like chemical refining in
order to tap into the cheap energy market. “It’s been absolutely critical to
our success and growth plans,” said Grant Thomson, president of olefins and
feedstock at Calgary-based chemical maker Nova Chemicals Corp., which is owned
by the Emirate of Abu Dhabi.
Last month, Nova Chemicals began
sourcing ethane by pipeline. The line stretched from the Bakken region of North
Dakota to Joffre, Atlanta. The capacity of the line is quite astounding at
40,000 barrels a day. The magnitude of the capacity has gotten the company off
to a good start, as it recently announced that it would invest $1 billion in a
new polyethylene unit, which is due for completion in 2016. The company is also
spending $250 million to upgrade its plant in Corunna, Ontario, which
specializes in the manufacturing of chemical building blocks for everyday items
such as food packaging and grocery bags.
Upgrades to the facility will
allow the vicinity to switch from a crude-based feedback to a lighter diet of
propane, butane and ethane. “We used to import crude from Algeria,” Mr. Thomson
said, “but a surplus of gas-liquids on the U.S. Gulf Coast has pushed down
prices for ethane. It is quite attractive now to bring this ethane north into
Canada,” declining to provide specific figures. The company plans to ramp up
Marcellus imports to 37,000 barrels a day by the third quarter, acting CEO Todd
Karran announced on May 1.
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