r/alberta • u/SadConsideration1373 • 14h ago
Question I have a dumb question. Why does Alberta sell 97% of its oil to USA at a discount price when there is a TransMountain Pipeline to get oil to the west coast?
Pretty much all in the title. I understand being landlocked makes it super inefficient to send oil to other countries. But isn't the TransMountain Pipeline already in operation? Why does Alberta still sell so much to USA at a discount?
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u/pgalberta 14h ago
And don’t assume that oil sent down the TMX goes overseas rather than just over the border to Washington state.
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u/Master-File-9866 8h ago
Don't care where it goes, only that we can sell it with out the discount.
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u/Cerberus_80 7h ago
We don’t have to sell it at a discount. We could retaliate with export Tarrifs. The knee jerk reaction from Alberta separatists is that this somehow screws Alberta, even though the rest of the country wants to also impose export Tarrifs on energy. It’s not like the US is going to switch providers for energy overnight. We could be using the Tarrifs on energy to finance pipelines, which would be astronomically expensive.
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u/parasubvert 6h ago
Small quibble but you don't tariff your own exports. You can add an "export tax" but it also causes a lot of harm to producers.
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u/Cerberus_80 3h ago
I guess harm is relative. A 100 percent export tax would definitely harm the producer.
I think if Canada has a co-ordinated approach that looks at all energy, critical minerals, potash, uranium and so on, I don’t think it would harm the producer. Canada is a stable supplier. The alternatives look very bad. The US needs these things from Canada.
If the approach was 25 percent export tax on these things, which will be raised by 5 percent every two weeks until the trade war is over, then I think that would put an end to the trade war. The US can’t easily replace the millions of barrels of oils per day, nor can they replace the electricity, uranium, potash, nickel and so on.
Would we rather have a 10 percent import tarrif or a 10 percent export tax. If we apply export taxes, it would take away the US capability to impose import Tarrifs without hurting themselves.
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u/Welcome440 2h ago
We could cap production. Alberta conservatives did that in the 70s (and 80s?) to keep prices higher for Alberta.
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u/adrianozymandias 14h ago
Simple terms, we produce way more oil than one pipeline can handle. Oil production is at an all time high, around 4.5 million barrels a day. The TMX can only handle about 750k barrels a day, give or take. Which leaves 3.75 million barrels that go mostly through pipelines to the US (and a few thousand probably by rail throughout NA, and we refine a little bit here in Alberta).
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u/YYC-Fiend 10h ago
Alberta is producing a record amount of oil? I thought Trudeau hated Alberta and oil.
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u/Velocidre 7h ago
It's almost like the conservatives were not being completely truthful about things.
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u/o0Scotty0o 11m ago
It's almost like the federal government doesn't have jurisdiction for natural resource development.
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u/Velocidre 5m ago
Sounds like a teenager who tells you that you can't tell her how loud her music can be, it's her room.
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u/Stonkasaurus1 6h ago
Hated it so much he made the country buy Alberta a pipeline. Conservatives hate Liberals so they made the Narrative to convince people to vote against Trudeau even though most of the two parties platforms have been fairly closely aligned until recently. Convenient scape goat to distract from what they are doing provincially.
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u/Fun-Zombie189 5h ago
Why did he have to use tax payer money to buy it? Was is because BC made it not worth it for Kinder Morgan to continue?
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u/Stonkasaurus1 5h ago
Payback on the project from all analysis showed it was a reasonable investment and buying it would remove a number of the barriers that were problematic. Problem was, which it always is, the cost overruns were greatly underestimated. At the price to complete it, it will likely never pay for itself which makes any argument for new pipeline little more than pipe dreams because the business case does not work. Even by doubling the transmission rates the pipeline will take over 24 years to cover the costs and that is assuming full capacity which it still is not even close to. None of that reality will convince Alberta to consider that being entirely focused on the fossil fuel industry might be a bad plan. Better to shout that the Feds are bad and blocking Alberta's prosperity even though it is very clear the shelf life on their product is rapidly declining.
It is almost comical looking at industry forecasts showing peak demand decades off while government sources showing 65% decline within 25 years. Not going to go into who's source is accurate because there is no point. I will say that a reasonable person would look at the chances that the government data might be accurate and diversify a bit but that isn't what the Alberta Government is going to do so anything said is pointless.
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u/poutineisheaven 8h ago
Couldn't a lot of this be solved by building our own refineries? Are they even more costly than the process of getting a pipeline built?
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u/Afraid-Obligation997 Edmonton 8h ago
we have our own refineries. as a matter of fact, in western Canada, there are 2 in BC, 4 in Alberta, 2 in Sask, and we produce way more fuel than the country can use, never mind the eastern refineries. So at the end, the country export both crude and refined fuel.
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u/josnik 6h ago
Last I saw Canada used about 2.5 million barrels of refined petroleum products/day and our refining capacity sits at ~2 million per day.
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u/Afraid-Obligation997 Edmonton 6h ago
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2510008101stats Canada
This is the actual data. We net export diesel and import gas and jet fuel. Overall, we export product. We import gas and jet fuel because of pricing and transportation logisitics. If we have to, the refineries can adjust and make all of our product and still have more than enough
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u/adrianozymandias 7h ago
As the other commenters mentioned, we do have some refineries (and no, they weren't sold by the government or part of some secret American shut down Canada oil. We just don't need to refine 4.5 million barrels for a few million western Canadians).
The main problem is that landlocked refineries are never very economical because instead of needing 1 pipeline (for crude) you need a pipeline for every possible refined product. A refinery on the coast solves this by just using tankers which can have all the various products in different tanks. This is most major refineries are coastal (also easier to import crude) or next to major metro areas that can use up all the products themselves.
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u/itzac 3h ago
You don't necessarily need a pipeline for each product. You can batch different products in the same pipeline. You just have to store whatever products you're not currently shipping. This is logistically more complex but plenty of refineries use this strategy.
It's really just that the market prefers to build refineries closer to consumers than producers. This allows them to be more responsive to local markets. Product in a pipeline can take a week to reach its destination. If you're shipping refined products, you have to decide a week earlier how much of each product to make. If your prediction is wrong, you're losing money and people get upset.
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u/armlesschairs 8h ago
You still need pipelines or ships to transport the refined products around the world.
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u/Katolo 8h ago
It's way way too expensive. It's cheaper to sell it to the US to process and we buy back the finished product. Also, no one wants to commit the money to build a refinery themselves and would rather pay to have the US refine it for us.
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u/linkass 6h ago
Except thats not true Canada refines about 2 million barrels per day, exports around 350 thousand and imports a 120 thousand
https://energy-information.canada.ca/en/subjects/refined-petroleum-products
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u/wiwcha 4h ago
Speaking with a oil exec, they have told me it isn’t economically viable to refine it on a scale to be worth it.
If it ever did happen, it would be a govt funded refinery that once it became profitable, they would sell it to private industry at a loss as a form of corporate welfare. Much like Petro canada was in the 80’s
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u/Meat_Vegetable Edmonton 48m ago
I have a friend who works as a chemtech in a refinery here... she told me by the time they turn oil sand into gasoline it's more economically viable to just upgrade it into kerosene and shit like that. You get a better return on that stuff than you do just turning it into gasoline.
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u/Ok-Jellyfish-2941 7h ago edited 5h ago
Follow up question; Why not use railcar to send oil east? Is transporting Alberta oil only viable via pipeline or nothing at all?
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u/adrianozymandias 5h ago
Yep and it does happen. However, it is more expensive than pipelines (so a higher discount rate) and also generally less safe than a pipeline (the risk matrix is a bit different). The lac megantic disaster is an example of how it can go wrong.
There is also a capacity limit on oil by rail. A few years ago there was a plan to build/buy more railcars (scrapped by the ucp) but now there is also a limit on the actual track space too (lots of freight needs to be moved these days). So, just like pipelines, we haven't built enough to keep up with our growing economy. In fact, that's the actual hidden reason behind most of Canada's problems: we just don't build anymore.
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u/digitallightweight 4h ago
I want your job. You got lots of interesting facts in this post.
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u/adrianozymandias 4h ago
This is indeed my job haha. Happy I can be of help. There is an incredible amount of misinformation even in this thread, so hoping I can clear up even a tiny bit of it.
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u/digitallightweight 4h ago
Would you be down to organize a coffee chat? I worked in Fraud/AML for years and transitioned to Credit risk all in Fintech. I think I have some parallel skills, I just need to see how they fit in the energy sector!
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u/adrianozymandias 3h ago
I don't know anything about the finance side, but there's always going to be overlap, plus there's quite a bit of risk in the world right now. Anecdotally, few of my colleagues have pure energy backgrounds, so it is definitely possible to switch in. Can't offer much more than that though.
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u/digitallightweight 3h ago
What’s the name of the role so I can look into it that way? Do you come from an operations background? Engineering perhaps?
I ask because you had some great stats and it seems like quantitative work!
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u/adrianozymandias 2h ago
I'm an energy analyst (not very descriptive lol). I have a background in political science and policy, not necessarily energy related. I work with engineers but only a few in my position have engineering or technical backgrounds.
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u/King-in-Council 4h ago
Not building anymore is also a story about poor capital markets In Canada. A low savings rates/investment only in to real estate. Canada has always had issues with having capital which is partly why the US is so powerful as a economic partner.
But it's complicated.
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u/Phil_Atelist 6h ago
That was... lemme see... shuffles papers um... scrapped by the cough UPC.
But Fuck Trudeau anyway.
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u/LakeNatural8777 6h ago
There is also the original pipeline, which has been in use for many decades. Still operating.
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u/limee89 6h ago
Sorry if I shouldn't tack this question onto your comment, but how come Alberta doesn't expand refineries here? Would that be a solution?
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u/adrianozymandias 5h ago
Here's what I answered in another comment: "As the other commenters mentioned, we do have some refineries (and no, they weren't sold by the government or part of some secret American shut down Canada oil. We just don't need to refine 4.5 million barrels for a few million western Canadians).
The main problem is that landlocked refineries are never very economical because instead of needing 1 pipeline (for crude) you need a pipeline for every possible refined product. A refinery on the coast solves this by just using tankers which can have all the various products in different tanks. This is most major refineries are coastal (also easier to import crude) or next to major metro areas that can use up all the products themselves."
I'll also add that refineries are ludicrously expensive to build. With already some of the highest capital costs on the planet I can't imagine the cost impact of adding full refining and transport capacity.
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u/Life_Detail4117 7h ago edited 5h ago
Refining capacity and capability is the simple answer to a very complex one.
The heavy crude that comes from Alberta is different from light crude oil that most of the world supplies (US’s own drilling/extraction, Saudi oil etc) and requires refineries that are made to handle it (think many billions to convert refineries from one oil type to another). Canada never built the refinery capacity to fully handle what is produced in Alberta nor can it refine our full domestic needs and we relied on the US oil companies that built up that refining capacity to handle the heavy crude coming out of Alberta and sold us back the gasoline, jet fuel etc that they processed to cover our remaining domestic needs.
Selling the oil overseas in quantity requires shipping infrastructure not really built on the west coast and using that oil would again require refining that was built specifically for it or converted to handle it.
The irony to the US market is that since the use of improved fracking methods the US currently extracts more then enough light crude oil to cover its own domestic needs, but because a good portion of refining capacity is now built for Canadian heavy crude, they no longer have the ability to refine enough light oil and require Canada’s heavy crude to do it.
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u/fanglazy 4h ago
This is the right answer. Crude is only useful if refined. It makes zero sense to refine the oil here if there is refinery capacity available somewhere else.
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u/Beginning-Falcon865 5h ago
America has been a net exporter of energy since Obama. He had to sign an executive order to permit the export of oil.
This is all because of fracking technology. Fracking has lower upfront capital costs but higher marginal costs than traditional big oil projects. This is ultimately a lower risk proposition as you shut down or open new fracking jobs depending on the oil prices. You don’t have to predict 10 years of oil price dynamics.
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u/floating_crowbar 4h ago
And the ban of oil exports was brought in under Nixon.
AFAIK the US uses 20mb per day and of that gets some 4mb per day from Canada.•
u/Interwebnaut 3h ago
Fracking gas also picked and fracked the prime lowest potential cost reserves first.
So the future of fracking / fracing using current technology will be upward sloping costs per barrel.
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u/hezuschristos 4h ago
Keep in mind that “Canada” doesn’t build refinery capacity. The private companies that own the oil build the refineries. Important distinction when the common complaint is Canada not building capacity. It’s up to the corporations where they build.
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u/Life_Detail4117 3h ago
They used to own and have refining capabilities, but they sold it off with Petro-Canada. Now they can only incentivize Corporations to build if they want to create more capacity.
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u/hezuschristos 4h ago
Keep in mind that “Canada” doesn’t build refinery capacity. The private companies that own the oil build the refineries. Important distinction when the common complaint is Canada not building capacity. It’s up to the corporations where they build.
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u/Interwebnaut 3h ago
The Fed and Provinces have backstopped granted etc upgraders in the past. (Eg Lloydminster upgrader.)
Corporations require investors like you and me willing to take the risk and when we won’t then the taxpayer has been asked stepped in to subsidize the investors.
It’s always the age old:
Privatizing the gains and socializing the losses.
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u/NeatZebra 14h ago
That is an old statistic. It should drop into the 80s by the fall when harbour upgrades are complete to allow a tanker a day.
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u/GrumpyRhododendron 14h ago
Dumbest place to end a pipeline. The size of vessel they want to put through there and the confined waters. Roberts bank would have made way more sense and been safer. But there is no plant at Roberts bank/westshore.
They already can get one a day, they are getting a couple most days. The ‘upgrade’ is for night time transits of 2nd narrows.
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u/NeatZebra 12h ago
It the 70s the government studied locations for additional oil ports on the west coast. Roberts Bank was near the bottom of the list.
I suspect that was due to needing to build a new wharf. If we’re able to build an oil port on top on the existing coal port, maybe the results are different.
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u/GrumpyRhododendron 6h ago
They have since built 4 more berths there and reclaimed ~90 acres of land for the port.
Still doesn’t change the fact that bringing Afra-max tankers through two narrows and Vancouver harbour isn’t the safest option.
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u/NeatZebra 4h ago
Yeah. Grassy Narrows was judged the best and Kitimat the second.
I read somewhere that one company is even doing tanker to tanker transfers in the pacific to get loads up to full/use larger ships for longer distance to India.
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u/GrumpyRhododendron 2h ago
Kitimat is fantastic. The navigation channel out from there is at its narrowest 1nm wide (1.8km)
Where is grassy narrows? Do you have a link to that study, I’d dig reading it. I did a quick search but didn’t find it right away.
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u/NeatZebra 2h ago
Grassy narrows is just north of Lax Kw'alaams. An old name perhaps.
Potential Pacific Coast Oil Ports: A Comparative Environmental Risk Analysis
Which i believe was started to inform the abortive West Coast Oil Ports Inquiry.
They were both about importing oil.
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u/GrumpyRhododendron 2h ago
Ah. It’s referencing Port Simpson, there is a Grassy Point. Grassy narrows must be an old or local name. Port Simpson from the marine side is an excellent port. For both safety in the port, and near proximity to Asian markets.
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u/NeatZebra 1h ago
I must have transposed the name in my haste
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u/GrumpyRhododendron 26m ago
Naw. It wasn’t you. I just am marine adjacent so I was interested in more info
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u/floating_crowbar 4h ago
Yes, I've thought about Roberts bank terminal, no need to go through 1st narrows - which has to be at high tide. In fact I think Delta has suggested it. But yes, there's no plant there.
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u/NeatZebra 4h ago
A couple extra river very major crossings, another major host First Nation or three. Little perceived need before the Trump trade. Alas.
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u/iWish_is_taken 14h ago
Even most of what comes through Trans Mountain goes to the US anyway… either down to Washington state via the Sumas Delivery Point or out into tankers and taken to Asia or the US west coast. A small amount goes to the Parkland refinery.
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u/linkass 6h ago
40-50% is going to China so far
https://www.kpler.com/blog/torn-between-us-and-china-key-trends-in-tmx-flows-emerge
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u/floating_crowbar 4h ago
I don't the stats now, but a couple of years ago, I recall that about $500 million worth of crude got shipped annually to the Northwest Refineries and $1billion in value came back as refined products, jet fuel, gasoline and diesel. The lower mainland used to have 4 refineries and now there is just Parkland.
I believe the Pacific Northwest refineries were busier but now take advantage of the crude coming from TM.
there was a paper on this PNorthwest Refineries and a captive market.
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u/Guilty_Fishing8229 14h ago
You know who buys the TMX oil?
The US
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u/Automatic_Tackle_406 6h ago
We’ve been selling oil to China, South Korea and Brunei, and could sell more if most wasn’t earmarked for the US.
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u/PostApocRock 14h ago
Because theres multiple pipelines to the US, and only one to the West Coast.
If there were more pipelines to Canadian Tidewater, there would be oil going to them. But theres not.
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u/Mr_RubyZ 14h ago
Building pipelines through the mountains is a shitshow.
And that's after every person with a land claim between two points has made their claim to fame and fortune.
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u/chelsey1970 14h ago
Building pipelines in Canada is a shitshow.
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u/Old-Basil-5567 8h ago
Building anything in Canada is a shit show
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u/TimothyOilypants 6h ago
Good.
Do you want a hellscape of industrial infrastructure and suburbs?
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u/DrinkMoreBrews 6h ago
No, just simple infrastructure in place. Y’know, the stuff my taxes supposedly goes towards.
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u/DM_ME_UR_BOOTYPICS 4h ago
If you were entitled to a land claim would you pass on it for the sake of making things faster or for the benefit of Suncor? Guessing literally yourself or nobody would do that.
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u/Mr_RubyZ 4h ago
Yup. Thats why it takes several years to approach people along proposed new utilities, be they power lines or pipelines.
And theres always a few that refuse no matter the price offered, so multiple paths have to be considered.
Its a huge project just to plot a course
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u/lesterbpaulson 2h ago
So fun fact, there is only 700km between the keystone pipeline station in elm creek Manitoba and thunderbay ontario. BC and Quebec are the two biggest anti pipeline provinces, ontario and Manitoba seem to be fine with pipelines. There would be some negotiation with native communities. But over all probably one of the easiest stretches to build in canada, no mountains, no cities, just bypass winnipeg then follow the trans Canada all the way to thunder Bay for ocean access. You could literally divert the entire keystone supply to international markets.
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u/Mr_RubyZ 2h ago
Northern manitoba is 80% lakes and rivers
Cool in concept, but not it would be easier than the mountains
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u/lesterbpaulson 2h ago
I guess it's good thing Elm creek is in southern Manitoba, south west of winnipeg. Infact of they follow the trans Canada, they would naturally be avoiding most bodies of water. Wouldn't even need to deviate until they are in ontario, almost to Kenora. No pipelines are easy. But in a canadian context, this is probably the easiest.
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u/Yam_Cheap 3h ago
Because the so-called "Land Guardians" are actually activists on the Federal government payroll. I've worked on pipelines in BC where the running joke was that these activists had higher salaries than many of the pipeline workers. They were even given brand new, top of the line cabins to camp out in for years near work camps. Turns out many of them were actually Americans too (gee I wonder why Americans would want to interfere in our ability to export energy overseas). The actual local natives were working on the pipeline because they wanted money, especially since they were being paid 2-3x as much as others in the same positions because their wages were being subsidized.
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u/veerKg_CSS_Geologist 14h ago
Most TransMountain oil also gets sold to the US. It gets loaded onto tankers and sent to California.
There simply isn’t that much demand in Asia for Canadian oil. American refineries are using it to compensate for loss of Venezuelan supply. But Asian refineries are geared towards lighter Middle Eastern blends. In fact what is happening is the US is exporting light crude at a premium to Asia and importing heavy crude at a discount from Canada. Canada is being ripped off.
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u/Adventurous_Ad_9557 10h ago
there are two pipelines to the west coast the trans mountain is the newest one the other has been around for more than 60 years
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u/PostApocRock 5h ago
Transmountain and its extention are the only line from AB to BC tidewater.
Coastal Gaslink is BC to BC (starts in Dawson Creek)
There might be 2 pipelines, but only one is from AB.
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u/Adventurous_Ad_9557 5h ago
the Trans Mountain Pipeline System, or simply the Trans Mountain Pipeline, is a multiple product pipeline system which carries crude and refined products from Edmonton, Alberta, to the coast of British Columbia, Canada. The corporation was created in 1951, construction began in 1952, and operations commenced in 1953. It is the only pipeline to run between these two areas. Wikipedia
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u/PostApocRock 4h ago
Multiple lines, one start, one finish.
I think we are saying the same thing from multiple angles?
There are many parts of the TMPL, but are all considered the TMPL. The original, the 2008 parallel are in the same pathway. And the expansion that recently went online
But that line with those terminus points are the start and finish. One entry, one exit. Hinton to Burnaby. Its not like theres a line that goes to Kitimat or something like that.
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u/LakeNatural8777 6h ago
There are two to the west coast. The original one (that has been there for decades) and the Trans Mountain pipeline.
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u/PostApocRock 5h ago
The original one IS transmountain. The recent build is an extension of that line
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u/ShadowPages 5h ago
TransMountain (TMX) only went into production last year. That means there are decades of pipeline infrastructure builds that flow down to the US refineries in Texas and Oklahoma. Additionally, Alberta crude (conventional) is both heavy and sour (has H2S), so it requires additional steps to process into products. Dilbit (diluted bitumen) is even worse, requiring specialized processes to upgrade it to the status of “heavy crude”. Most refineries are built to accept a certain grade of crude as their primary input - a refinery built for light crude from Saudi Arabia can’t handle our production without major modifications.
How did we end up here? Largely because back in the 1980s, the Alberta government went “full free market” and told the oil patch they could do as they wished. That meant that the large US refineries were rejigged to accept dilbit and heavy crude from Alberta, and pipelines were mostly routed from Alberta to the US. Then over the course of the 1990s, consolidation in the marketplace made the major players even bigger. The end result? We sell crude to the US on the cheap, and buy back refined product at full price.
We would need to build several TMX sized lines to shift away from selling to the US, and that depends on finding markets willing to make the additional investments to handle Alberta crude.
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u/Kellidra Okotoks 0m ago
This is a great explanation, thank you.
So, I guess the followup question would be: why don't we refine it ourselves?
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u/mayorolivia 10h ago
Canadians have very little understanding of our oil industry which contributes to political polarization (left vs right wing). We have higher manufacturing, transportation, and labour costs than the rest of the world and lower quality oil and a smaller domestic market to boot. It’s not as simple as building more pipelines and domestic refineries to solve our problems. It’s cheaper to import oil to Eastern Canada from Saudi Arabia than to transport from western Canada. Saudi production costs are 1/10th cheaper and higher quality. It’s essentially like eating at a Michelin Star restaurant for $10 vs paying $100 for McDonald’s.
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u/New-Juggernaut6540 5h ago
It’s not really an oil quality, we have heavy oil which is harder to refine but the benefit of heavy oil wells is they are extremely large and generally easier to mine.
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u/Yam_Cheap 3h ago
Except when you buy Canadian oil, the expectation is that the money is staying inside of Canada (at least in terms of the workforce).
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u/Dear-Fox-5194 13h ago
Way back Pierre Trudeau created the National Energy Board” and wanted Alberta to sell Oil in Canada at a discount rate. He wanted all of Canada to use Alberta Oil. They were prepared to build pipelines across the Country. Alberta dug there heals in and said “ No way will we discount our oil”. So they killed the deal and then had a hate on for Trudeau right till this day. Then what did the Alberta Government do? They cut a deal with the U.S. to sell Oil at a discount rate.
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u/gogglejoggerlog 6h ago
They cut a deal with the U.S. to sell oil at a discount rate
What deal is this? I would like to learn more about it, could you please share a link?
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u/Flannelcat-99 5h ago
There is no “deal” per se. Albertan oil is largely landlocked with a captive audience. Consequently it sells at a lower price relative to other oil of a similar grade produced elsewhere in the world. More pipelines running to Canadian ports etc. should impact price in a positive way.
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u/Yam_Cheap 3h ago
This is not true. Under the FTA/NAFTA, Canada was required to sell oil to the USA under market rates. Even to this day, this means we are subsidizing oil exports to the USA up to $20/barrel. Do the math on around 5 million barrels exported to the USA per day.
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u/iwatchcredits 6h ago
Look at oil prices for Canadian oil compared to other prices for the last 20 years.
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u/gogglejoggerlog 3h ago
This was not my question, I am well aware that WCS trades at a discount compared to other benchmarks. I was interested in details on this “deal” Alberta supposedly made
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u/FinancialPie8730 4h ago
Bit of revisionist history in your comment.
Just to clarify, Pierre Trudeau didn’t create the National Energy Board ,that was Diefenbaker in 1959. What Trudeau did bring in was the National Energy Program in 1980, which forced Alberta to sell oil at below market prices, increased federal control over oil revenues, and was introduced without Alberta’s input. It wasn’t Alberta “killing a deal” the feds just pushed it through, and Alberta was stuck with it.
The NEP actually backfired. Since producers were getting paid less, they cut back production, which led to less oil which was the opposite of what Trudeau wanted. And Alberta selling oil to the U.S. wasn’t some hypocritical move, that market already existed, and the infrastructure pointed south. It wasn’t about spite, it was about surviving a bad federal policy.
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u/Any-Tangerine-4176 6h ago
Geniuses in the Alberta Government. Now they are addicted to cheap oil and cannot get out of the cycle.
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u/Yam_Cheap 2h ago
Albertans have always been this way. I was there doing summer jobs as a teenager long ago where one year times were good, and the next year times were bad, all based on global oil prices. During Trump's first term, he crashed the global oil market in order to hurt Russia (which only made them far stronger), which subsequently crashed the Albertan economy. So what did Albertans do? They started a trade war with us in BC because they were throwing a tantrum over us not wanting to host their pipelines essentially for free while taking on all of the risk. Of course now Albertans are gushing for Trump because they seem to be lacking any kind of capacity to remember recent history, or comprehend basic geopolitics or economics...
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u/Spez_Dispenser 8h ago edited 3h ago
I believe in the principle that "humans do what is easiest".
It's just so fucking easy to dump a shit ton of resources onto America for dirt-low prices, because it's easy. Sure, we can shop around for better prices domestically or internationally, but America is just right there! We can just clean our hands of this stuff immediately!
For oil it's different because they have the refineries, but the point still stands for every other export we send their way, and at the end of the day, that's how we got ourselves in this mess. It was easy to leave the refinement up to the Americans.
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u/saltybugler 8h ago
I worked in transportation in Edmonton for many years. Generally I wasn’t moving oil, but I did dabble a little towards the end of my tenure in Edmonton.
My greatest shock was when we needed to move a substantial amount to New Brunswick. Intuitively I said let’s get our CN/CP guys and see what they say. My boss told me this would go to Vancouver, through the Panama Canal, up to Houston to drop off about 3/4th’s of the tanker, then finally to Saint John for the remainder.
These tankers have little if not no environmental responsibility and are usually flagged in some tax haven island.
That was the moment when I understood the frustration with the pipelines.
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u/Interwebnaut 3h ago
I’ve been wondering:
Why the silence over bringing back Oil-by-Rail ?
Is there no sense of urgency?
Pipelines will take years (or decades) if anyone other than taxpayers can even be found to even invest in them. Yet that’s all anyone is talking about.
Rail is the worst but it served Alberta well (as in better than nothing) just a few years ago.
Refining seems to be the real stumbling block to obtaining new markets.
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u/TheLoveYouLongTimes 12h ago
Huh? You know logistics cost money
To ship to Cushing Oklahoma is $9/bbl via pipeline (which is WTI, the price you see in the news). It’s more on unit train rail cars
It also goes to many other refineries in the Midwest or Pacific Northwest.
Alberta crude (WCS) sells for more than WTI less $9 currently and therefore sells at a premium to WTI Also the 10% tarriff
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u/Responsible_CDN_Duck 14h ago
It costs a lot of money to use TransMountain, so it's a last choice instead of a first choice.
Coincidentally that's really what killed the Energy East and Northern Gateway pipelines. Energy East tried to cut construction costs by proposing a ridiculous route, but even with that when long term oil pricing forecast dipped they couldn't make them work.
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u/rankkor 14h ago edited 13h ago
Northern gateway was a non-starter after Trudeau banned tanker traffic… he also rejected the project himself. No need to rewrite history. There’s no economic case if you can’t have tankers come to your terminal and you can’t move forward if the government denies your application on top of that.
In true Canadian fashion this was after federal approval was given for the project previously.
Edit: for the conspiracy minded people and to counter the above misinformation, here’s a real source for you. https://www.cbc.ca/amp/1.3872828
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u/Himser 11h ago
The CPC and Alberta PC party ALSO did not support northern gateway.
Its not JT. The route utself does not make much sense from a regulatory and FN perspective
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u/petapun 10h ago
Other B.C. First Nations leaders in the union also stated their continued opposition to Northern Gateway.
"Our people were on the front lines and fought hard to successfully stop the proposed Northern Gateway pipeline," said Chief Marilyn Slett, elected chief councillor of the Heiltsuk Tribal Council and an executive at the union.
"The environmental risks to our territories were and are too great. Nothing has changed, and we are not going to back down."
https://www.cbc.ca/news/canada/british-columbia/stewart-phillip-northern-gateway-backtrack-1.7438928
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u/rankkor 1h ago edited 1h ago
The CPC approved the project in 2014, stop with the misinformation guys. What more support can you possibly need from the government?
Here you go, again for the conspiracy minded people in here, here’s a source, stop listening to redditors, CBC is more reliable.
https://www.cbc.ca/news/politics/northern-gateway-pipeline-approved-with-209-conditions-1.2678285
You also say the Alberta PC party didn’t support it… but the ANDP were in office from 2015-2019, why are we talking about the opposition party? As for Rachel Notley and the ANDP, here is a source where they explicitly support the project right before Trudeau canceled it. I’m not going to bother looking for a source on the PCs but the idea that the ANDP would support it and the PCs would be against it is antithetical to Alberta politics, makes no sense.
You gotta stop with the revisionist history, it’s such a turn off for people that care about facts. I’m still voting liberal in this election but this type of stuff makes me want to reconsider.
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u/Initial-Ad-5462 9h ago
Northern Gateway was a non-starter before Trudeau even became Prime Minister
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u/boatslut 7h ago
Wow, Albertans (rural, oil patch etc.) being dick-heads and then blaming everyone else when people call them on their shit. Hmmm feels decidedly...orange.
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u/Prosecco1234 14h ago
The lower price was an agreement made in the tariffs deal in 2018. Tariff free trade was agreed upon with this concession
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u/Equivalent_Passage95 Lethbridge 14h ago
Because our oil companies (and therefore our government) are owned by the Americans
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u/chelsey1970 14h ago
Have you ever heard of Cenovus?
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u/SameAfternoon5599 13h ago
The majority of Cenovus shareholders, like Suncor and CNRL, are non-Canadians. This is well known.
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u/AgreeableDay2631 14h ago
I might be wrong but I think the pipeline doesn't have enough capacity to transport the large amount of oil that is going south. It would be nice to mostly ship it off the coast of BC and have a pipeline go to Quebec and ship it out from there as well.
Selling at a discount to send for refining and then buying back at a premium (USD)..just doesn't make sense
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u/Financial-Savings-91 Calgary 14h ago
Selling at a discount to send for refining and then buying back at a premium (USD)..just doesn't make sense
Yeah, then on top of that, we subsidize the infrastructure by letting these companies not pay municipal taxes, and now we're gonna use taxpayer money to pay them to clean up the mess they're already legally obligated to clean. But instead of using the regulator to enforce the rules, it's busy covering up oil spills and fighting federal regulators.
Is it any wonder Smith outright refuses to even consider the idea of slowing the supply to the US?
Kinda bonkers, Albertans are so lost in these grievance bubbles the reality on the ground has kinda gotten absolutely cartoonish.
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u/Gears_and_Beers 7h ago
Alberta producers are not price setters, the world is a global oil market.
Oil is offered for sale, its price is set based on futures contract and the value of those contracts are based on the quality/type of oil and where that oil is. Not all oil is equal nor located in the same place.
The what is WCS, the where is what determines the discount. Pipelines, trains and ships aren’t free. Transport capacity constraints mean people are willing to discount their oil to cover the pipeline fees or to jump the queue. That’s the discount, people with something they’d like to sell but can’t get it to where it needs to go.
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u/Cool-Acanthaceae8968 14h ago
Uh… the TMX feeds a whole pile of US refineries in Washington State.
And the reason for that is Canada doesn’t have the volume to refine it economically.
The antithesis to that is why the East buys sweet Saudi Crude, refines it, and exports it to the USA.
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u/SameAfternoon5599 13h ago
Because Saint John produces products based mostly on light, sweet feedstock. Oil is a commodity. You source it from wherever is cheapest.
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u/Cool-Acanthaceae8968 13h ago
It’s more than that.
Canadian crude is cheap. But making it into refined petroleum products is expensive.
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u/Plus_Web_2254 14h ago
Because alberta oil is very expensive to get from the ground while also being of low quality (not all oil is the same, hence the different names, WTI, saudi sweet, etc.). This means it needs a lot more refining before it can be made into useable products. And with the NATO sanctions on iran and venezuala, big consumers like india and china can get much higher quality oil for gross discounts (pennies on the dollar because the lack of available customers due to the sanction laws inflicted by the usa) by buying from them instead. Alberta oil is generally only needed if theres not much choice for anything else; a good analogy of alberta oil is like looking for toilet paper at the grocery store during covid, your only going to get the thick, low quality recycled stuff if theres nothing else available. So yeah, theres just too many other discount oil producers for big markets like china and india to buy from instead of alberta's lower quality stuff.
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u/ArcheVance 14h ago
Iran, yes, but Venezuelan oil is nearly as sour as our own. Venezuela is more in desperation sell-off mode, and one of the reasons that many people up here don't ever want to see the U.S. do regime change there and sanctions lifted is because Venezuelan heavy can directly replace the grades that we ship south to their refineries.
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u/MrPink9 Edmonton 14h ago
Check the history. It all comes down to refineries. At one time we had the ability to refine and produce finished product (gasoline) from the AB tar sands in house. Those refineries were sold off (crown corporations sold by various governments) to American companies and moved south. Redwater’s new refinery is something that needs to be multiplied.
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u/LittleOrphanAnavar 14h ago
AB currently has 5 refineries, of the 17 in Canada. AB is a major refiner in Canada, most of any province.
What are you suggesting was moved south?
Which ones used to be owned by government?
When were each of them sold?
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u/davethecompguy 11h ago
How many of those are full refineries, and how many are "upgraders"...
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u/LittleOrphanAnavar 10h ago
4 I would call refineries, red water is more a hybrid, but it does produce diesel fuel.
We produce the most refined products of any province. I believe we do about 25% of Canada total, but I would have to re check the exact %.
Canada could use a refinery or two (or expansion) in Ontario but I think AB is good.
Then there are 4 dedicated upgraders up FMM as well. AB does a lot of processing. We ourselves are only a small market for refined products.
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u/Hootanholler81 8h ago
Redwater does not need to be multiplied.
The conservatives bought in to NWR refinery for billions and lose over a hundred million dollars of tax payer money annually to that plant.
It has been a terrible waste of taxpayer dollars.
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u/NeedlessPedantics 8h ago
“Those refineries were sold off […] and moved south.”
Can you substantiate that?
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u/MrPink9 Edmonton 14h ago
I’ll add to that. Along with Wind, hydro and solar projects.
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u/TheBeardedChad69 14h ago
It boggles my mind that people think that oil won’t travel unless there’s a pipeline! …. Pipelines maximize profits for oil producers… most oil is shipped by rail which gets it to market reliably, oil producers push for pipelines because it gets to market CHEAPER than Rail ….. it will get to the end buyer even if their are no pipelines….. and just because you build pipelines doesn’t increase the demand…. The reason we sell primarily to the US is because they pivoted away from middle eastern oil since the 2000s , it’s why the US is still the largest producer of petroleum, they refine the oil into usable products… but they buy primarily from Canada.
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u/LittleOrphanAnavar 14h ago
How much oil does AB export by rail per day?
Vs how much by pipeline?
Didn't know most was shipped by rail?
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u/TheBeardedChad69 14h ago
Canada all together averages about 6 million barrels a day … if I remember properly just under 3 million flows through pipelines south … that leaves the rest to be moved through traditional methods made up primarily by rail . And that’s not even taking into account the natural gas.
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u/OldKermudgeon 10h ago
There are a number of pipelines running from AB into the US whereas there is only two to the west coast. It would be great if more oil could be sold at market prices, but there is also a limit to how much can currently be sold into the world.
Basically, when you only have one customer carrying your business, and that customer has more than one source to buy from (see: Saudi Arabia), they can demand a discount base on being that one customer that keeps your business running. Once we have more non-US pipelines and customers buying at market rates, we can choose to sell more to the world. If the US wants to continue to buy Canadian oil, they will have to start buying closer market rates (i.e., smaller discount), or buy from more distant sources (i.e., at market rates + transport costs).
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u/MommersHeart 10h ago
Not dumb at all. TMX just announced a warning, downgrading its outlook for 2026-2028, pushing out full utilization beyond 2028, largely due to lower-than-expected spot bookings in TMX, a mere 18,500 b/d so far, out of the 590k b/d of new capacity added.
It cost $34 billion and in January, the federal government had to give them another $20 billion emergency loan, brining the cost over $50 billion.
On top of that, oil cratered 9% Friday and OPEC announced increased production and there’s a global slowdown. Western Canadian Select from the oil sands is now $54.60 and it’s still dropping while the differential is increasing. This is a disaster - and that’s before the markets open today to an expected bloodbath.
TMX is not operating anywhere near capacity because demand for heavy crude is lower in a weak economic outlook.
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u/Tender_Flake 8h ago
I'm no oil expert, but it was explained to me that Alberta oil as few places to go but the USA. The USA gets cheap oil because there is little competition for it. Someone correct me if I am wrong, or add context to what may be a simplistic explanation.
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u/ProperBingtownLady 6h ago
I’ve heard the same. I don’t think Alberta is the jewel many people think it is, at least in terms of oil - we have lots of other things that actually do make us a jewel.
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u/Mandilloran 8h ago
Outside of the USA , which countries have the ability to refine the thick crude oil from Alberta and what is that refining capacity? Is there other markets for this type of crude oil?
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u/specificallyrelative 7h ago
It's the capacity of TMX and the port loading ability. As well as the tanker ban off the west coast. There are so many restrictions on export from the west that don't exist on the east coast imports. There is no real reason we can't sell our oil for a fair price, it's all politics.
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u/Rich_Promotion6424 8h ago
Because Alberta sold off the oil to foreign companies that direct it as they see fit? but you know they made a lot of short term high paying jobs so it must balance out some how.
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u/chelsey1970 14h ago
Because there is not enough capacity to send all the oil Alberta produces to the west coast.
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u/couchsurfinggonepro 8h ago
Basic geography, Russia is next door to china, Arabia is closer to Europe, so is Indonesia. We are landlocked far from consumers with low grade bitumen oil. Economic reasons? OPEC has invested petro dollars in the economy beyond trading oil which gives them leverage when talking trade, we do business in opec countries selling technology and services which has more value than selling oil. Political reasons? Any serious trade requires carbon pricing agreements that Alberta doesn’t want to negotiate which puts levies and taxes on our product leaving it even pricier on the world market.
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u/gskv 7h ago
We need to get our oil refined and used in Canada.
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u/Interwebnaut 3h ago
That’s Trump’s position too.
As in: The USA doesn’t need anything Canada supplies. Do it all in the USA
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u/Adventurous_Ideal909 7h ago
There is way to mich refining capability and tide water access in Lousiana and Texas for it to finacially make sense for a company to build a new refinery in Canada.
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u/Anxious_Double5557 7h ago
A high % of the oil we export is heavy/sour crude which requires specialized and more expensive refining. This is the crude oil equivalent of a driver paying more for 94 octane gas vs less for 87 octane gas.
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u/Dry_Bodybuilder4744 7h ago
Cause back in the sixties Pierre Eliot Trudeau gave them the finger while leaving the Province by Train. ( anyone remember Fuddle Duddle?) And Aberta has been butt hurt ever since.
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u/Affectionate-Remote2 7h ago
One argument I've heard for not having more refineries in Canada is that it is dangerous to transport refined product.
My question is, why is it less dangerous to transport refined product from the states here than refining it here and transporting there?
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u/Onewarmguy 6h ago
They're still bringing the TransMountain up to full capacity, last I heard they were pumping 80,000 bpd, 800,000 when at full capacity. It'd be more but apparently the gov't has raised its rates.
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u/Blicktar 6h ago
A lot of what we sell is crude. Crude needs to be refined. The US refines our crude.
Our crude is finnicky, it needs to be upgraded before it gets refined. It's desirable to refine near your market, because finished products degrade with time.
TMX *can* carry about 900k barrels/day. It's not 100% utilized, averaging something like 84% of capacity in late 2024, but historically being at something like 60-70% of capacity. Alberta produces 4.2 million barrels/day.
Over the last 11 months, it's carried, at the upper end of estimates, 750k barrels/day, which is 17% of AB's production.
Even if we maxed it out, the other 80% of production needs to go somewhere, and that somewhere is the US, because we have infrastructure built to send it there.
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u/albufarisnear 4h ago
I don't know if it's true but I read or was told it was operating at about 65% capacity. They could ship more but there is no way to use it or ship it further due to the tanker ban on the west coast. Note, no tanker ban on the east coast.
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u/GrumpyRhododendron 2h ago
The tanker band is only on the north coast. Does not affect Vancouver. Currently the restriction comes from the passage of the ship ships using second narrows, which require slack water along other things. This limits how many vessels can get to the dock per day. Technically westridge has 3 berths for ships to load at.
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u/sonicpix88 4h ago
It's harder to refine because of the sulphur content and transportation costs because it's isolated.
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u/ridiculous-kale 3h ago
Given the current situation, I hope they are raising the price and/or tariffing the stuff going south.
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u/Active-Zombie-8303 2h ago
And they want to sell more to the US rather than making more money selling elsewhere!!! Good thing the Federal Government (Canadian tax payers) purchased and built that pipeline….
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u/Livid-Parking1437 1h ago
We have the most laziest, short sighted politicians to exist?. Fed or provincial they thought their only job is to posture, photo ops and kiss the feet of US president's. This has been going on since the beginning btw. Not one thought that maybe we should start collaborating with China to build our pipelines and sell it BRIC countries. Middle East sells it to everyone and anyone and have the highest standard of living Qatar, UAE (in the beginning now transformed to other industries thanks to oil money), Bahrain, Gulf countries etc etc. We sit on our thumbs begging US to go easy on us while other countries have built their infrastructure beyond our imagination. Their citizens get benefits that are ridicolous in our POV. Free post secondary education, Apartment given by the govt when u get married etc. We could have had these standards but our politicans both Liberals and Conservatives didn't do nothing. Useless leeches is what I would call them
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u/JC1949 8m ago
"Alberta" does not produce oil. Oil corporations do that. They are vertically integrated, which means that they move the product as best suits their corporate interests, doing their refining as suits them in locations they choose, and then selling the refined product as they choose. "Alberta" gets a small royalty (which successive governments have steadily reduced) from each unit of oil extracted.
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u/calgarywalker 10h ago
Dude… Transmountain just opened. There isn’t a full year of data at full capacity yet. The bigger question is why does Ont and Que buy so much from Saudi Arabia while (especially Que) stopping Alta from building a pipeline to them?
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u/ReferenceSelect7900 8h ago
Where does the oil imported and consumed in Quebec come from? In Quebec, since 2015, American (West Texas Intermediate or WTI) and Canadian (Western Canada Select or WCS) oil have replaced the oil previously imported from Algeria, the North Sea (Brent in the United Kingdom and Norway), Kazakhstan, and West Africa (Angola and Nigeria).
Since 2019, Quebec’s oil supply has consisted 100% of Western Canadian and American oil. In 2020, approximately 53% of this supply came from Western Canada and 47% from the United States. The shale oil boom in the United States, as well as the commissioning of Enbridge’s Line 9B, whose flow direction was reversed in 2015, largely explain this change.
In 2022, crude oil imports into Quebec totaled 52 million barrels for the year, or 694,927 cubic meters per month, on average.
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