Pipelines Are Essential When Oil Prices Drop

says an oil lobby group:

Tumbling crude prices have made building new pipelines more important than ever for Canadian oil and gas producers because the fate of some projects hinges on shipping costs, the head of the industry’s main lobby group said on Wednesday.

Canadian companies have long complained that the industry suffers major lost revenue because their oil, Western Canadian Select, is at times sold at a discount of up to $40 per barrel to Western Texas Intermediate crude.

More recently Canadian heavy crude has been trading at a discount of $15 a barrel.

The industry hopes new projects giving them expanded access to U.S. and Asian markets, such as TransCanada Corp’s Keystone XL pipeline and Enbridge Inc’s Northern Gateway project, would reduce this gap.

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