RE: Oilsands Producers Can''t Fill GapNot A Bad Complaint eh.
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Oilsands producers can't fill gap if Venezuela cuts of oil to U.S.: experts
By Lauren Krugel, The Canadian Press
CALGARY - With Venezuela talking tough about cutting off its oil exports to the United States, the Americans might look to their friendly neighbour to the north - already the No. 1 exporter to the U.S. - for a stable fuel supply.
But the question is whether companies who operate in Northern Alberta's vast oilsands can step up production fast enough to fill the gap should the South American communist state, the fourth largest exporter to the U.S., decide to follow through on its threat.
"The U.S. may have to get supply from other countries, including Canada," said Gordon Laxer, a University of Alberta political economist.
But shortages in labour and pipeline capacity might put a damper on that plan, he said.
"I really don't think that we can ramp up production quickly. We don't have surplus production capacity."
The already bitter relationship between Venezuela and the United States became even more tense on Sunday when president Hugo Chavez threatened to cut off oil sales to the U.S.
The move was retribution for the freezing of $12 billion in assets belonging to Venezuela's state oil company, Petroleos de Venezuela SA. U.S. energy giant ExxonMobil, parent company of Imperial Oil Ltd. (TSX:IMO), challenged Venezuela's nationalization of a multibillion dollar oil project in U.S., British and Dutch courts.
"If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States."
The Toronto Stock Exchange's energy index was up by about two per cent Monday and major oilsands players appeared to be reaping the most benefits. EnCana Corp.'s (TSX:ECA) shares were up about 3.6 per cent over Friday's close and Suncor Energy Inc. (TSX:SU) saw its shares rise by more than two per cent.
"If Chavez and his allies succeed in cutting exports to the U.S., I guess the price of oil will go up and that makes the tar sands more viable as economic concerns," said Laxer. Crude oil hit a one-month high of $94.72 on the New York Mercantile Exchange before settling at $93.59 Monday.
The only way to get more Canadian crude oil to the United States would be to divert supplies headed to markets like Ontario southward - and that's something most Canadians will not stomach, Laxer said.
Venezuela may not suffer very much if it loses the United States as a customer, since the booming economies of China and India are always looking to secure their own steady supply of oil.
Then the United States could buy oil from the countries that used to supply China and India, Laxer said.
"I think that Chavez is going to sell to the world market. If he doesn't sell to the Americans he's going to sell to someone else. He has to because his revolution is based upon taking the proceeds from oil and giving it to the poor," he said.
"If supplies for that market are not cut in total, the Americans can buy it somewhere else. And it isn't going to be from Canada because I don't see us ramping up production more."
David Detomasi, an associate business professor at Queen's University, said he isn't making much of Venezuela's latest threat.
"It's kind of a tempest in a teapot at the moment. This is a never-ending kind of soap opera with Venezuela," he said.
"Although this mantra has been played very well in the past, I think it's wearing a little thin as (Chavez) realizes that Venezuela is very dependant on export earnings, particularly to the United States and that without private investment in their firms they're not really competitive to do that."
It takes so long to push forward oilsands development, that the latest Venezuela-U.S. tensions could be long forgotten before any Canadian oilsands expansions come on stream, Detomasi said.
He added that Canada is always going to have an eager buyer of oilsands crude south of the border regardless of whether Venezuela makes good on its sabre-rattling.
"Over the long term I think Canada should be well poised to sell more oil to the United States," he said.
All of the candidates vying for the U.S. presidency have been hammering the point that America needs to become less dependant on foreign oil in general.
"And when they mean foreign oil they typically don't think about Canada, they're thinking about Venezuela, they're thinking about by and large the Middle East," Detomasi said.
"If they realize they have a secure, profitable source just north of them, I think that's good for Canadian industry."
Last year, Petro-Canada (TSX:PCA) sold its working interest in a joint venture with ExxonMobil in Venezuela. Earlier, the Venezuelan government had demanded a majority stake in the La Ceiba oil field.
Canadian mining companies, like Toronto-based Crystallex International Corp. (TSX:KRY), saw their stock prices plummet last year amid speculation Chavez would nationalize that industry as well.
"It's interesting to see resource nationalism in conflict with the transnational oil companies. This is a rising tide that's going around the world," said the University of Alberta's Laxer.
"Canada is one of the few islands where that is not happening. We are the odd country out in this."
https://ca.news.yahoo.com/s/capress/080211/business/venezuela_oil_canada