U.S. Crude Export Ban Benefiting This Canadian Offshore Oil Producer

(December 10, 2013 - Seeking Alpha) U.S. Crude Export Ban Benefiting This Canadian Offshore Oil Producer (By: Michael Fitzsimmons)


In an excellent article by Sandy Fielden at RBN Energy, the author explains how the ban on US crude oil exports is benefiting east Canadian refiners and oil producers in the offshore East Canadian oil fields of Hibernia, Terra Nova and White Rose. In affect, the US is exporting oil to Canada at WTI prices freeing up Canadian oil production to be exported at international Brent prices. Companies like Suncor Energy (SU), Husky Energy (OTCQB:HUSKF), Exxon Mobil (XOM), and Chevron (CVX) are all likely receiving higher realized prices for their cut of production from these fields.

According to Fielden, US crude exports to Canada are rising while at the same time Canadian exports outside the US are also rising. In effect, the US is exporting light-sweet crude to Canada at a discount to WTI which is enabling Canada to export its light-sweet production to the international market based on higher Brent prices. As a result, Canadian refiners are taking advantage of cheap US imports to improve their processing margins. And oil producers from the Hibernia, White Rose and Terra Nova fields are freed up to export their product at higher Brent prices.

Fielden says market data suggests oil is flowing to Eastern Canada primarily by tanker from the Eagle Ford or by rail and tanker from the Bakken. He also cites a Reuters report that India's biggest refiner bought one million barrels of Canadian White Rose crude through a tender from trader Glencore. Also, according to a Platts report in August (2013), Chile's state-owned oil company has been buying at least one cargo a month of Canadian Hibernia and Terra Nova crudes since April 2013.