Ecuador court gives green light for Silvercorp, Salazar’s El Domo project
The ruling removes the last major obstacle for the $250 million project, located 150 km northeast of Guayaquil.
In a move that should go a long away to relieve the oil glut in the US Midwest TransCanada said on Monday it is going ahead with construction of the $2.3 billion southern leg of the Keystone XL oil pipeline from Cushing Oklahoma to the US Gulf Coast.
The Calgary based company said the shortened pipeline could be operational by June-July next year. Keystone XL was designed to carry 830,000 barrels per day.
Keystone XL was to have stretched from the Canadian oil sands in Alberta via the Cushing storage hub to the Gulf refineries for more than 2,600 kilometres, but needed state department approval because it would have crossed an international border.
The Obama administration torpedoed Keystone XL in this form in January.
Reuters quotes from a White House statement issued on Monday saying “moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production.”
Canada exports 2 million barrels of oil per day to the US and almost all of it ends up at Cushing – the pricing point for US crude – where inventories have been piling up and refining capacity is limited.
Alberta production is set to more than double to 3.7 million barrels by 2025 out of a total of 4.7 million. Production in the US particularly from the Bakken basin in North Dakota will see the country ramp up current output of 7.8 million barrels/day to 10.9 million barrels over the next few years.
New oil sands crude combined with greatly increased Bakken output have seen West Texas Intermediate (WTI) fall far behind international prices. Canada’s producers in turn have to deal with deep discounts to the US benchmark.
North Sea Brent, the global oil benchmark, settled at $125/barrel on Monday while WTI was trading at $107 in late New York trade. Historically WTI has traded at a premium to Brent, but has steadily declined since the Saudis dropped the WTI contract as their benchmark in 2009.
Western Canada Select – a blend of heavy oil sands oil and conventional crude – has been languishing at lows not seen in years.
On Monday it was trading at $28 below WTI recovering from a $35.50 discount earlier in February. In September last year the discount was only $8.00.
The discount for Syncrude, a light oil made from oil sands after undergoing an expensive upgrading process, traded at a $13 discount. Before an outage at a major oil sands upgrader curbed supply Syncrude fell as much as $23 below the value of US crude. In July last year Syncrude attracted a premium of $18.
