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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: CommanderCricket who wrote (156989)9/14/2011 10:14:40 AM
From: teevee  Read Replies (3) of 206093
 
The sandbox is getting stupid cheap.

And it will get cheaper. "Sandbox" production and growth is capped by takeaway pipeline capacity, the Cushing bottleneck and limited heavy crude refinery capacity. Should the XL pipeline be built, "sandbox" crude will have to compete with Venezuelan and Saudi heavy crude in a dutch auction for limited heavy crude refining capacity. As some of this is owned by Exxon, an initial 100,000 b/d from Kearl with further reduce the refinery capacity for third party heavy crudes, putting even more pressure on heavy crude pricing at Cushing and at GOM terminals.

Without oil pipelines to the Canadian west coast, providing access to other markets, "sandbox" heavy crude pricing and production growth is capped or potentially negative against operating cost creep.

Where is the upside?
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