Saudi oil filling a New Brunswick refinery – what kind of a domestic energy policy is that?
A Calgary based oil trader wishing to remain anonymous recently went on record to say that Irving Oil has “fixed the 299,235t Kamakshi Prem to ship crude on January 21 from Ras Tanura, Saudi Arabia to its 300,000 b/d refinery in St. John, NB in Canada.”
Yes you read that right, Canada’s largest refinery, the Irving Oil New Brunswick facility, imports oil from Saudi Arabia. If you study crude trading markets, that news won’t come as much of as surprise since waterborne crude can originate anywhere, but for most of us, it’s a bit of a disconcerting shock. Why does Canada import oil at all, and if we must why from Middle Eastern nations like Saudi Arabia?
Given that eastern Canada imports oil from abroad, it becomes obvious that Canada has a problem. One region of the country produces too much oil, while another imports it from distant and perhaps unreliable jurisdictions. The imbalance is bad news for Canada because locally produced oil is having trouble getting to market due to a lack of pipeline infrastructure, which hurts multiple stakeholders. One solution is Trans Canada’s Energy East pipeline. It would move up to 1.1 million barrels per day of crude from landlocked western regions to eastern Canadian refineries. This would benefit western Canadian producers, eastern refiners, the government – through higher royalties and taxes – and Canada as a whole. Yet the Energy East project is, like any pipeline big enough to make the news, having a lot of trouble getting off the ground…..