Thursday, March 29, 2012

A northern pipeline crisis looms

(Reuters) - Oil traders still grappling with an unprecedented pipeline bottleneck in the U.S. Midwest that roiled global energy markets last year should beware: Canada may be next.

The pipelines that carry crude from Alberta's oil sands and the Bakken shale fields of North Dakota to U.S. refiners may run out of capacity as soon as 2015, some analysts now warn.

Fears that the export of Canadian crude will be constrained have risen recently as a result of pipeline project delays and the unyielding growth of North Dakota output. Any resulting glut could weaken Canadian oil prices, depress profits for producers like Suncor Energy Inc and Cenovus Energy Inc and choke growth in the largest source of U.S. imports.

A crisis could be avoided, though. Major pipeline operators like Enbridge Inc say they're confident that an estimated 1 million barrels per day (bpd) of idle capacity on existing Canada-to-U.S. lines is more than enough for up to five years, sufficient time to complete new lines or add pumps.

That view is by no means unanimous. Read More