Valero to ship U.S. crude to its Quebec refinery

A new chapter in the North American oil revolution is about to open on the Texas coast, with two major pipelines poised this summer to deliver an unprecedented influx of heavy Canadian crude to U.S. refineries – and potentially beyond. The anticipated startup of the Seaway Twin oil pipeline later this month will open the door for another 450,000 barrels per day (bpd) to flow from Cushing, Oklahoma, to oil tanks near Houston. A second line, Flanagan South, built at a cost of US$2.6-billion, will start pumping even more Canadian crude from Illinois to Oklahoma.

California, the third-biggest refining state in the U.S., is about to see a flood of oil by rail from places such as Canada and North Dakota as suppliers seek to tap a market isolated from the rest of the country.

U.S. oil exports are poised to reach the highest level in 28 years as deliveries to Canada more than triple, helping bring down the price of the global benchmark Brent crude relative to U.S. grades.

CALGARY — Domestic crude oil production in the United States is on track to surpass imports, Washington’s energy fact-finding arm says, in another sign of shifting market conditions that have punished Canadian energy stocks and cast doubt on multibillion-dollar oil sands expansions.

CALGARY • Suncor Energy Inc. is tapping U.S. Gulf Coast crudes and bringing more oil to its Montreal refinery by rail as it waits for pipelines to connect Eastern Canada with Western Canadian oil fields. Over the next few months, the Calgary-based company expects to start shipping more than 30,000 barrels a day of Western oil by rail to the 137,000-barrel-a-day plant.

CALGARY — It takes, on average, about six days to barge 150,000 barrels of oil sands crude along inland waterways from north of St. Louis to the refining hub of St. James on the Louisiana Gulf Coast. The route, including passage on the Mississippi River, is one being marketed by Jeffersonville, Ind.-based American Commercial Lines Inc. to oil sands companies hit hard by price discounts as an alternative path to the Gulf Coast refining corridor as major projects such as TransCanada Corp.’s Keystone XL have become mired in controversy and U.S. politics.

After years of keeping the price of crude sold to the U.S. low enough to maintain market share, Saudi Arabia is losing ground as the shale boom leaves U.S. refiners with ample supplies of inexpensive domestic oil. Arab Light crude for sale in the U.S. averaged 48 cents a barrel less than Light Louisiana Sweet, a Gulf Coast benchmark, in August, the narrowest discount in data compiled by Bloomberg back to 1991. The U.S. imported 878,000 barrels of Saudi crude a day in the first four weeks of August, the least since 2009.

Canadian light crude prices are expected to take a beating as the U.S. shale phenomenon eats into its market share, according to an analyst. Unlike Canadian heavy oil, Canadian light sweet crude has weathered the U.S. shale gale over the past few years. Synthetic crude — produced from bitumen in upgraders — has been trading at a premium of US$101.44 per barrel this year compared to WTI’s $98.28. But lately it has been trading at a discount to WTI as high as US$19.