The Keystone Pipeline and the Brent / WTI spread?

[mshan]

Interesting to see how underlying reality differs from the D vs. R, liberal vs. conservative, us vs. them, political rhetoric on tv:

http://video.cnbc.com/gallery/?play=1&video=3000182003 (9 million barrels of additional capacity has come online in U. S. in last few weeks)

http://video.cnbc.com/gallery/?play=1&video=3000182005 (oil imports have decreased from 9 million barrels / day a year ago to 7.5 million / day now)

"Oil from the Bakken is generally mid-weight and fairly sweet. Ideally it should stay in the Midwest, because the refineries around Cushing are still designed to process light sweet oil. However, the other area where North American oil production is booming produces just the opposite. In fact, oil from the Canadian oil sands is so heavy that it has earned a distinct moniker: “bitumen.” And there is a tsunami of bitumen on the way. The two million bpd being produced in the oil sands today is set to increase 50% in just the next three years.

However, Canada’s oil sands are not the only place in the world producing heavy oil. In general, global production is gradually moving towards heavier, sourer crudes because the easy deposits of light, sweet crude are being tapped out. And that has forced refineries to evolve.
A refinery designed to handle light, sweet WTI crude cannot switch to heavy, sour oil sand bitumen without some serious upgrades. To that end, US refineries have invested billions in upgrades over the last decade to enable them to process heavy oil. The catch is, now the refinery army along the Gulf Coast needs heavy oil – just as they couldn’t easily switch from light to heavy, they can’t switch from heavy back to light.

The obvious source is the oil sands. It’s a win-win: Oil-sands producers want to get their oil to suitable refineries, and the heavy oil refiners on the Gulf Coast want Canadian crude, because without access to bitumen they are being forced to pay a premium for to secure heavy oil supplies from Venezuela."


http://www.forbes.com/sites/energys...s-caught-between-the-sands-and-the-pipelines/

Really haven't paid much attention to the whole Keystone pipeline debate, but from bits and pieces I've read, I always thought that northern leg was designed to bring Canadian oil sands to refineries on gulf coast that can process the heavier sour crude and then export it to China (?) IIRC, the oil being produced from the Bakken Shale is light sweet crude, while some refiners that used to process imported oil were configured to process heavier, more sour crude. So some of those crying loudest about the Keystone pipeline may be oil refiners on the Gulf Coast that can't retool for light sweet crude without heavy expense (?)

The pipeline from Cushing to Gulf Coast was going ahead last year when Keystone pipeline debate was going on, and CNBC clip above says that some leg from Cushing to the east coast has also been completed.

 

[silverpig]

Basically oil sands are by and large replacing other heavy sour crudes from Mexico and Venezuela, and the Nigerian Bonny Light (which while light, is very GHG intensive because of flaring).