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Re-exporting Canadian Oil through U.S.

US Crude oil exports twip141022fig1-lgAccording to an Energy Information Administration (EIA) report released October 31, crude oil exports reached their highest levels in 57 years in July.  The EIA reported that the United States exported 401,000 BOPD in July, marking the second highest monthly export volume since the EIA started publishing data in 1920. Due to current U.S. crude oil export restrictions, most of the oil exported from the U.S. is only sent to Canada, but the EIA report shows that some of the oil is being re-exported from Canada to Spain, Singapore, Italy, and Switzerland.

The reason for the re-exportation of Canadian oil through the U.S., according to another release from the EIA, is limited infrastructure. Some Canadian companies are testing the economic viability of moving their oil through the Gulf Coast for re-export to other markets, but it is unclear how long this trend will last. With Enbridge Inc.’s (ticker: ENB) Line 9 reversal project expected to be in service in 2014 Canadian companies could access global markets via the St. Lawrence Seaway.

canadian export routes twip141022fig3-lgAs unconventional oil and natural gas production continue to grow in the U.S., encouraging higher levels of exports is one option for encouraging economic growth. An article released by Brookings, looking at a study done by the National Economic Research Associates (NERA), suggested that “lifting the ban on crude oil exports from the United States will boost U.S. economic growth, wages, employment, trade and overall welfare.”

If the export ban were to be lifted entirely by 2015, the NERA found that in a high oil and gas resource case that the discounted net present value of GDP could exceed $1.8 trillion by 2039, reduce unemployment at an average annual reduction of 200,000 over the next five years, and enhance U.S. energy security.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.