UBC Prof: Nexen Approval Will Boost Pipelines to Coast
Keith Head, a professor at UBC’s Sauder School of Business, said it may not matter to Nexen acquirer China National Offshore Oil Corporation whether it’s Enbridge’s Northern Gateway pipeline to Kitimat or a twinned Kinder Morgan pipeline to Burnaby that delivers oil to tankers destined for Asia.
“I don’t think they’re wed to any particular pipeline,” Head told the Straight in a phone interview. “But my strong presumption is they are thinking that there’s going to be a way to get that oil to China. And the only feasible way is pipelines.”
According to the UBC academic, there’s already a “strong business proposition” for the export of oil to Asia. At present, much western Canadian oil goes to Cushing, Oklahoma, where it’s priced as Western Texas Intermediate. That oil goes for about $20 per barrel less than London’s Brent Crude price, the global standard.
“Obviously, I think the Chinese [government], through CNOOC, is very interested in having some of the oil flow towards it,” Head explained. “I don’t think CNOOC is buying Nexen because it’s interested in exporting oil to Cushing.”
A report released in June by the Canadian Association of Petroleum Producers notes that Canadian oil gets “discounted prices” in Oklahoma.
“New additional capacity to the west coast is key in order to link western Canadian crude oil production to the world market,” according to Crude Oil: Forecast, Markets & Pipelines. “Both Kinder Morgan and Enbridge have pipeline projects to increase access to the west coast.”
– straight.com