Keystone XL Trans-Canada Pipeline Will Streamline Delivery of Canadian Crude

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Jan 26, 2012, 05:30 ET

IRVINE, Calif., Jan. 26, 2012 /PRNewswire/ -- Despite political opposition, the Keystone XL Trans-Canada oil pipeline is a viable economic and environmental alternative according to David Hackett, president at Stillwater Associates, an oil and energy consulting firm based in Irvine, CA.

The Keystone XL initiative was designed to deliver heavy sour crude oil from sources in Alberta, Canada and light sweet crude oil from North Dakota to US refineries along the Gulf Coast. With recent adjustments to the price of crude oil on the global market and a re-evaluation of costs of transporting crude to refineries and markets here in the US, the Keystone XL Pipeline would be both a cost effective and environmentally sound alternative to moving the Canadian crude oil from its source via current forms of distribution including rail, truck, river barges and sea-born tankers.

In a recent paper entitled Catching the Brass Ring: Oil Market Diversification for Canada Professor Michal Moore, of the University of Calgary wrote, "With better access and new pipeline capacity, oil producers will see more efficient access to international markets which can add up to $131 billion to Canada's GDP between 2016 and 2030." David Hackett and Susan Grissom of Stillwater Associates co-authored the paper and provided in-depth analysis of global crude oil supply and demand as well as the US crude oil distribution system.

"Our analysis showed Midwest and Rocky Mountain refineries are running flat out on heavy Canadian crude oil," says David Hackett. "The analysis also showed some 2.3 million barrels per day of heavy crude imports to the Gulf Coast, although there is only about 120 thousand barrels per day of Canadian supply into that market. Heavy crude refining is optimized by coking technology and the next coker is on the Gulf Coast. The market is short of pipeline capacity to the south."

"After the publication of the paper, we also realized that improved pipeline connections from the Mid Continent to refineries on the East Coast could replace Brent-priced light sweet crude with similar quality Bakken at a competitive price. Perhaps these barrels could make a real difference in the economic viability of the Delaware River refineries."

Contact:
Dave Hackett
Susan Grissom
Stillwater Associates
949-653-5899
www.stillwaterassociates.com

SOURCE Stillwater Associates