Decision by the European Union allows for sale of Canadian oilsands crude in the Eurozone
The European Union will now officially treat oilsands crude the same as oil from elsewhere in the world, after finalizing the decision on Friday, February 6, 2015. The European Parliament voted in December to remove restrictions from importing Canadian oilsands, which was accepted without amendments late last week, reports the Financial Times.
“Canada is a secure and reliable supplier of energy that is making a growing contribution to global energy security,” said Greg Rickford, Canadian Minister of Natural Resources. “The final [Fuel Quality] Directive builds on our long-standing partnership with the E.U. and positions Canada to enhance its status as an import energy source, now and in the future.”
On the same day, Canadian Finance Minister Joe Oliver said that it could not be up to the U.S. alone to support global growth. “Though America is carrying the world economy at the moment, that is simply not sustainable,” Oliver said. The decision by the European Parliament to allow Canadian oilsands will give the country’s struggling oil and gas industry access to new markets.
“This is an important signal for Canada as it means our oil will not face discrimination in Europe. It also opens the door further for Canadian companies to compete on a level playing field for new markets in Europe and abroad,” said Tim McMillian, president and chief executive officer of the Canadian Association of Petroleum Producers.
According to the Canadian National Energy Board, in Q3’14, 825.8 MBOEPD of bitumen and blended bitumen output (approximately 99% of Canada’s total output of 836.9 MBOEPD) was shipped to the U.S.
Expanding its global presence
TransCanada Corp. (ticker: TRP) is proposing to build a pipeline, called Energy East, that would transport more than 1.0 MMOBPD across Canada to the East Coast, enabling tanker shipments across the Atlantic.
According to the company, Energy East will be a 4,600 km (2,858 mile) pipeline that is planned to carry 1.1 MMBOPD from Alberta and Saskatchewan to refineries in Eastern Canada. The project will convert existing natural gas pipelines with the construction of new pipelines planned in Alberta, Saskatchewan, Manitoba, Eastern Ontario, Quebec and New Brunswick to link up the converted infrastructure. The exact route for the pipeline is still subject to regulatory review, but the planned starting point is a new tank terminal in Hardisty, Alta, with three other new terminals to be built along the pipeline’s route. The three terminals will be in Saskatchewan, Quebec City and Saint John.
The pipeline is already meeting some opposition, with the Ontario Energy Board unsure of the effect the project might have on water supplies along the route, and Ontario’s First Nations demanding a halt to the review process until they can be properly consulted. TransCanada is hoping to commission and in-service the Quebec terminal mid-way through 2018, with the Saint John terminal following later in the same year, according to the Energy East website.
Canadian oilsands in Europe: Easier Said than Done
Even though bitumen has ditched its “dirty oil” label in the E.U. international orders are not expected to come flooding in right away. Most refineries in Europe are geared to handle light crude rather than the heavy oilsands, reports the Huffington Post.
Despite not being able to send Canadian oilsands right away, McMillian remains hopeful for what it means for future exports. “We think that this is a very good signal worldwide as we look to expand our markets,” he said, even though it is not likely that Canada will begin supplying large quantities of oil to Europe in the short term.
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