Oil Slow Down Will Not Stop TransCanada
Gas prices dropped another nickel in Sioux Falls Wednesday as the price for a barrel of oil fell to 56 dollars. While the falling oil prices are good news for drivers, its not so good news for oil producers in Canada. Canadian crude is more costly to produce than regular oil, so when the price goes down so do profits.
Because Canadian crude is so costly to produce the falling oil prices are slowing production in northern Alberta.
And that's why both TransCanada and Hyperion are keeping their eyes on the oil industry north of the border.
It's heavy, it's black, and it's costly to produce. Crude from the Canadian oil sands in northern Alberta has been touted as America's alternative to Middle Eastern oil, but when the price for oil dips, so does the profit margin for Canadian crude.
Robert Jones with TransCanada's Keystone Pipeline project says, "I would say yes everyone is concerned. I think what has been reported is not really a cancellation but a defferal in projects."
It costs 50 to 60 dollars a barrel just to get oil out of the oil sands, and as the price of oil drops reports out of Canada are saying that the production of oil in northern Alberta is slowing.
But, Robert Jones with TransCanada's Keystone pipeline says the price is not going to impact the hundreds of miles of pipeline being put in the ground right now.
Jones says, "The shippers have signed binding contracts and no matter what the price of oil is, the consumer demand in the United States, the refineries, still need the oil."
Hyperion said in a statement Wednesday it doesn't plan to have the Elk Point refinery up and running until 2014, so the market will likely change before it will be purchasing Canadian crude for its refinery.
And TransCanada says with more refineries and more production in the U.S. there will always be a demand for the oil from northern Alberta.
Jones says, "I think the demand in the U.S. is heightened every year with the desire to move away from Middle Eastern oil."
One newspaper report out of Canada speculates that ten thousand oil sands workers could lose their jobs because of the slowing expansion of oil projects in northern Alberta.
