Money OPEC to Canada: Build pipelines or watch investment flow south

04:30  11 july  2018
04:30  11 july  2018 Source:   reuters.com

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Last week David McKay, head of RBC, Canada ’s largest bank, fretted that investment was flowing out of the energy and clean-technology sectors “in real time” because Canada was not competitive. If he cannot arm-twist OPEC , he may unleash America’s Special Petroleum Reserve.

It would mirror an operational pipe , also called Keystone, but would take a more direct route, boosting the flow of oil from Canada . "We build it in the United States, we build the pipelines , we want to build the pipe ," he said.

The president of OPEC urged Canada on Tuesday to invest in infrastructure to move oil and gas, or risk watching investment flow away to the United States.© REUTERS/Leonhard Foeger/File Photo

The president of OPEC urged Canada on Tuesday to invest in infrastructure to move oil and gas, or risk watching investment flow away to the United States.


The president of OPEC urged Canada on Tuesday to invest in infrastructure to move oil and gas, or risk watching investment flow away to the United States.

The Canadian government agreed in May to buy the Trans Mountain oil pipeline and a related expansion project from Kinder Morgan Canada (KML.TO) for C$4.5 billion ($3.4 billion), highlighting the lengths deemed necessary to overcome stiff opposition to such projects.

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Watch Live. The pipeline would also further cement the bonds between the two key North American producers and increase the interdependence of the U.S. on Canada , as a source of imported oil, over OPEC and other producers.

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Insufficient space in the country's oil pipelines has deepened the discount Canada's heavy crude can attract from U.S. refiners, compared with U.S. light oil futures.

"If you don't have the major infrastructure, investors are going to go to your neighbor, where infrastructure is not an issue," said Organization of the Petroleum Exporting Countries President Suhail al-Mazrouei. "Act and act quickly if you want to retain those investors. I am being frank because I want to be a true friend to the Canadians."

"I don't want them to lose opportunities."

Mazrouei was speaking in Calgary at a TD investor conference during the city's Stampede, an annual rodeo that is also the year's major meet and greet for Canada's energy sector.

Mazrouei, the United Arab Emirates' energy minister, also singled out Canada's low-priced natural gas. Much of it is produced in landlocked Alberta, and the country lacks a robust liquefied natural gas (LNG) export sector to consume it.

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By the end of the 1950s, new pipelines were being built to ship oil from distant wells into Edmonton and, from there, to Vancouver and south to According to the Canadian Association of Petroleum Producers, 99.999 percent of all the oil and gas moved by pipeline in Canada arrives at its destination.

Imported oil is more expensive than Canadian oil, arriving by tankers from other countries , like OPEC nations. Infographic: How do transmission pipelines contribute to Canada ? Is there daily visual or aerial inspections of all pipeline routes? Are there pressure and flow meters along all lines hooked

LNG Canada, a proposed C$40 billion export facility for the British Columbia coast, is being reviewed by its joint venture partners ahead of a final investment decision.

"The solution is LNG and pipelines to export that natural gas," Mazrouei said. "If you provide optionality for the gas, it's going to fix itself.”

(Reporting by Rod Nickel and Devika Krishna Kumar in Calgary, Alberta; Editing by Peter Cooney)

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