Canada Looks To China, India For Energy Customers

With the U.S. government shutdown dragging into a fourth day, investors watched closely as Republican members of the House of Representatives got together to chart their next course of action. But the market appeared to shrug off fears that lawmakers will fail to resolve the budget crisis and prevent a debt default. Rick Hutcheon, president and chief operating officer at RKH Investments, said the TSX will tread water until the U.S. political situation is resolved but will make gains as the economy improves and commodity prices stabilize. “Everyone is sitting on their hands, waiting for Washington to make their move,” he said. “They’ll have their bickering and fighting, but ultimately they’ll come to an agreement.” “I don’t see it having a huge impact on Canada,” he said, but added that the longer the U.S. impasse lasts, the more negative it could be for the Canadian market. The Toronto Stock Exchange’s S&P/TSX composite index was up 37.36 points, or 0.29 percent, at 12,772.48. Nine of the 10 main sectors on the index were higher. Financials, the index’s most heavily weighted sector, advanced 0.3 percent. Royal Bank of Canada rose 0.4 percent to C$66.23, and Toronto-Dominion Bank was up 0.4 percent at C$91.53.

But for the savvy investor, this represents a potentially profitable opportunity. The condensateconundrum North of the border, energy production is surging. According to the Canadian Association of Petroleum Producers, bitumen output from the Alberta oil sands is projected to double by 2022 to 3.8 million barrels per day. The problem with bitumen is that it’s too thick to flow freely on its own. It must be mixed with a super-light oil called condensate so that it can be shipped through pipelines. With growing oil sands production, condensate demand is poised to sky-rocket as well. Based on estimates provided by the Energy Resource Conservation Board, the demand for condensate in Alberta could double to 650,000 bpd within the next decade. Today, condensate is the most prized hydrocarbon in Alberta with the light oil trading for a 10% premium over West Texas Intermediate. Analysts fear shortages could result as imports struggle to keep up with demand. Yet south of the 49th parallel, the United States is facing a condensate glut. In the Texas Eagle Ford, condensate production accounts for as much as 30% of output.With forecasters projecting Eagle Ford production to exceed one million barrels per day by next year, much of that will be condensate. But here’s the problem. Nearby Gulf coast refineries aren’t well equipped to handle the super light oil bubbling out of the Texas shale. Over the last decade, refineries spent billions of dollars outfitting their plants to process heavy sour blends.

Canada and Malaysia sign deal to improve cooperation on security issues

Cutler,Guest blogger / October 4, 2013 Pipelines carrying steam to wellheads and heavy oil back to the processing plant line the roads and boreal forest at a project 74 miles south of Fort McMurray, Alberta, in Canada. Todd Korol/Reuters/File Enlarge Asian countries continue to line up for Canadian energy to which the United States is unable to commit. This week Japan ‘s prime minister Shinzo Abe met with his Canadian counterpart Stephen Harper to discuss the potential for shipping liquefied natural gas (LNG) across the Pacific Ocean to Japan. Although no firm agreement was announced, Japanese newspapers speculated that the first Canadian exports might reach Japan as early as 2018 and no later than 2020. OilPrice.com offers extensive coverage of all energy sectors from crude oil and natural gas to solar energy and environmental issues. To see more opinion pieces and news analysis that cover energy technology, finance and trading, geopolitics, and sector news, please visit Oilprice.com . Recent posts The Christian Science Monitor Weekly Digital Edition This reflects, among other things, the greater difficulty that Canada has had in developing LNG export terminals. Low prices for gas from western Canada is another problem, and although there is reason to believe in a secular rise towards higher prices, U.S. producers are less affected by the current levels. On the other hand, as prices rise, there are fears in Canada of a typical bust-to-boom scenario; and for this, there is fear that Canada’s gas producers are and will continue to be ill-prepared, not even able to take advantage of the anticipated boom. (Related article: Despite Shale, OPEC Still Matters ) RECOMMENDED: US energy in five maps (infographics) Nevertheless, India is also getting in line for Canadian oil as well as gas. India’s High Commissioner Nirmal Verma was also in Ottawa this week to sign a nuclear cooperation agreement allowing uranium from Canada to be sold to India as reactor fuel. India seeks to triple in electricity production in the next decade, in part by building as many as a dozen new reactors. Agreement was actually reached three years ago, but the additional time is required in order to establish a process for independent verification that the fuel is used for peaceful purposes. In 1974, India used a reactor supplied by Canada to create the fuel for a nuclear bomb test. India is even willing to consider investment in the Energy East Pipeline, even as TransCanada has had to delay its filing of an application to the National Energy Board from this year until next year. Environmental concerns that need to be addressed during the regulatory process are partly responsible for the delay, but also it is now foreseen that the original estimate of 850,000 barrels per day (bpd) is low and should be increased to 1.1 million bpd. (Related article: Canada to Drill for Offshore North Atlantic Oil ) Energy talks between the two countries were elevated to the ministerial level last year when our visit India, and India’s energy minister will be visiting Ottawa later this month to continue the discussions. The oil-sands are doing slightly better, as the first crude-by-rail unit train terminal is set to start transporting 50,000 bpd to the U.S. market next month. This amount will rise at least tenfold by the end of next year. Meanwhile, an official from Enbridge says that his company expects a decision from the federal government ought is Northern Gateway pipeline by mid-2014 and an in-service date four years later.

How to Profit From Canada’s Crude Oil Shortage

That’s not to say Canadians aren’t competing in Southeast Asia. The emerging economies have been a bright spot in global economic growth and a number of Canadian firms have capitalized. Marc Parent, the chief executive officer of Montreal-based CAE, says Canada punches “way above our weight” in the aerospace sector, and CAE’s flight simulators and pilot training are part of that success. A growing Southeast Asian middle class is a key driver, said Parent. And having a stream of top Canadian officials from ministers to the Governor General and now the prime minister visit the region in recent years has helped as well. “I can tell you it’s translated into increased business for us in Brunei, in the Philippines and other (regional) nations,” Parent told reporters. He was part of the round table group that met Harper on Saturday in a downtown hotel. Talisman Energy, Bombardier Rail, Teknion Furniture and several major financial institutions are among the Canadian firms already cashing in on regional growth. CAE Inc., does all the pilot training for Air Asia, a discount airline that’s the fastest growing in the region. Canadian business presence in Malaysia may be growing, but the Chinese regional colossus puts Canada-Malaysian two-way trade in sharp perspective and explains the fawning media coverage accorded President Xi’s visit. Canada-Malaysia commercial trade tops out at about $3 billion annually, while China is doing almost $100 billion dollars a year in trade with Malaysia. On Saturday, President Xi said he’d like to see that total hit $160 billion a year by 2017. Small wonder then that Harper is keying in on trade talks with Pacific Rim countries Malaysia included as part of the Trans-Pacific Partnership negotiations. Those talks will be a subtext of the leaders’ summit that begins Monday on the Indonesian island of Bali, where Harper heads later Sunday.