Face of Nation :Canada’s oil industry continues to face major pipeline bottlenecks as production far outpaces transport capacity, a persistent issue that has led to significantly decreased oil prices and a major loss of profits for Canadian oil producers. Despite the fact that the North American nation is home to the third largest crude oil reserves in the world, and that there is plenty of demand for that oil, Canada simply does not have the infrastructure to get the oil to market.
This severe shortage of pipeline infrastructure in Canada has not only led to maxed-out pipeline capacity, it has also filled storage facilities to capacity. While this storage shortage may just seem like even more grim news on top of all the other challenges Canadian oil markets are facing, Reuters is reporting that there is a major silver lining to the crude storage story. “Upheavals in the Canadian crude market are providing unique opportunities for firms with sizeable long-term leases on Alberta storage tanks,” write Reuters’ Nia Williams and Devika Krishna Kumar a cluster that sources say includes Mercuria Energy Group and oil major BP Plc’s trading arm.”
The Albertan government has made concerted efforts to lessen the oil-rich Canadian province’s ever-expanding crude glut, most notably with the use of production cuts over the last year. In the short term this approach was extremely effective, but ultimately was not a sustainable solution–nothing short of adding new pipeline infrastructure, and a lot of it, can truly fix Canada’s crude flow woes. In fact, even with the production cuts, Canadian oil inventories hit an all-time high this April when they clocked in at 37.1 million barrels according to data from energy industry information firm Genscape. This was reflected by the whopping $20.62 billion in profits that Canadian oil producers missed out on this past year, or around one percent of the nation’s entire gross domestic product for 2018, according to calculations by conservative think tank the Fraser Institute.
