Common Sense Canadian
 

There is virtually zero Asian demand for Alberta bitumen, new Kinder Morgan analysis reveals

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PostedFebruary 25, 2018 by in International
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Kinder Morgan bills customers for pipeline application

Artist’s rendering of proposed Kinder Morgan pipeline and tanker expansion

Read this essential analysis from Mitchell Anderson in The Tyee, torpedoing the argument that Alberta needs Kinder Morgan’s Trans Mountain Pipeline Expansion in order to capitalize on pent up Asian demand for its bitumen:

Canadians are often told the Trans Mountain pipeline project is imperative to access Asian markets anxious to buy Alberta bitumen.

True? Like many things in life, the truth is found in hard facts, not overheated rhetoric or wishful thinking. Ten years ago the Trans Mountain pipeline was quietly expanded by 40,000 barrels per day, about 13 per cent. With a decade of shipping data available since that upgrade, has the Asian market since exploded for Alberta bitumen?

Crunching the cargo statistics from the Port of Vancouver a very different picture emerges. In 2016 — the last year that complete data is available — the U.S. accounted for 99.99 per cent of outbound crude oil shipments. Of the 1,185,289 tonnes of crude shipped in bulk tankers that year, 1,185,121 tonnes were delivered to the United States.

In fact, total crude tanker shipments from Vancouver peaked eight years ago in 2010 at 4.3 million tonnes and have since declined 72 per cent.

And what about those hungry Asian markets? Crude exports from Vancouver to China topped out in 2011 at only 28 per cent of total outbound shipments. By 2014, they dropped to six per cent, and in 2016 they were essentially zero. The next largest Asian importers of crude from Vancouver were Singapore, which peaked at four per cent of total shipments in 2009, and India reaching two per cent in 2013.

The market seems to have decided that shipping diluted bitumen across the Pacific Ocean is a money loser. Like it or not, the main customer for Alberta bitumen remains existing refineries in the U.S. already tooled up to process high-sulfur low-value bitumen. And with the current U.S. administration anxious to complete the Keystone XL pipeline to refineries in Louisiana, why do we need to endanger the B.C. coast with tankers carrying dilbit to the same market?

Many Albertans would prefer to believe that once the Trans Mountain pipeline is rammed through, the good times will be here again. Again, the numbers tell a different story.

Oil economist Jeff Rubin recently published a damning assessment of the viability of increased pipeline capacity out of Alberta. Asian markets actually pay $8 a barrel less than U.S. refineries for heavy oil like Alberta bitumen. Likewise, European refineries typically pay $3 below the U.S. market after a long expensive boat ride.

The IMF just released a report on global commodity markets showing an average breakeven price for oilsands production at US$88 per barrel of Brent Crude — it is currently at $65.

Many multi-billion-dollar bitumen projects are already the economic equivalent of dead men walking, according to Rubin.

Read more here.

 

 

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One Comment


  1.  
    nonconfidencevote

    Interesting.
    Environmentally, Financially, and Strategically we would be far far better off sending our bitumen south to the States…..
    I’m sure that the money lost not selling our Bitumen to China will be more than recuperated by selling wild BC salmon………?





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