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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (52034)	5/24/2002 1:56:46 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

Reuters Company News Canada gives OPEC run for its money as US supplier By Jeffrey Jones CALGARY, Alberta, May 24 (Reuters) - Canada, bolstered by a huge number of planned oil sands projects, is set to boost dramatically crude exports to the ever thirsty U.S. market, providing stiff competition to OPEC, analysts said on Friday. The country has long been one of the top U.S. suppliers, now accounting for about 7 percent of the 20 million barrels a day U.S. market, but tens of billions of dollars being funneled into projects that tap Alberta's vast oil sands reserves has that number on track to jump considerably. Paul Cheng, an analyst with Lehman Brothers in New York, estimated that Canada will boost output by an annual average of 150,000 barrels a day over the next decade, starting late this year with the commissioning of Shell Canada Ltd.'s (Toronto:SHC.TO - News) Athabasca oil sands project near Fort McMurray, Alberta. Since February, Canada has been sending around 1.4 million bpd of crude to the United States, according to industry group the American Petroleum Institute. Last week, that level ballooned to a record 1.9 million bpd the API said, although analysts cautioned that weekly figures can oscillate wildly. Canada's importance as a supplier is also growing with uncertainty enveloping imports from the Organization of Petroleum Exporting Countries as political turmoil escalates in the Middle East, Cheng said. "It's in our back yard, it's politically stable, so it's only natural that the U.S. will promote as much of the imports coming from Canada as we can," he said. Canada is one of a handful of non-OPEC countries boosting production this year, causing a thorny problem for the cartel as it weighs whether to extend supply curbs to keep oil prices near its $25 a barrel target price. The country perennially jockeys for the top U.S. supplier spot with OPEC members Saudi Arabia and Venezuela and non-OPEC Mexico, which has cut exports in concert with OPEC. This year, new projects have boosted Canadian production, including Suncor Energy Inc.'s (Toronto:SU.TO - News) expansion of its oil sands operation, aimed at nearly doubling output to 225,000 bpd, and the 125,000 bpd Terra Nova oil development off the coast of Newfoundland. Other developments, such as Petro-Canada's (Toronto:PCA.TO - News) Mackay River oil sands project and Syncrude Canada's next expansion, are scheduled to start up in the next two years, providing a foil to Canada's declining conventional light crude output. The major risk to the projects has proven to be not political, but economic, as most have suffered huge cost overruns, due mostly to a tight labor supply. Despite calls for big increases, however, figures from the National Energy Board show exports to the United States fell from a peak of 1.46 million bpd in November 2001 to 1.3 million in February 2002, as producers of conventional heavy oil shut down numerous wells to cope with depressed prices. But prices improved sharply by the end of the first quarter and big producers like Canadian Natural Resources Ltd. (Toronto:CNQ.TO - News) have said they restarted some of the heavy output. Canada supplies much of its crude to the U.S. Midwest, which is welcoming the stronger flows as crude stocks there are well below normal. Midwest buying will strengthen with the full restart of Citgo's Lemont, Illinois refinery, crippled in a fire last August. "We definitely see the exports going up," said Martin King, analyst with FirstEnergy Capital Corp. in Calgary. "It's looking like the Citgo refinery outside Chicago is going to be coming on stream, either by the end of this month, or the first few weeks of June and we estimate that refinery takes about 60,000 barrels a day of Canadian heavy crude." Another recent snag has been some congestion of Enbridge Inc. (Toronto:ENB.TO - News) two million bpd pipeline system to the U.S. Midwest and southern Ontario from Alberta, the main artery for Canadian exports, a spokesman with the company said. biz.yahoo.com