Tidewater (marketing)

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Tidewater is a term used by industries and governments [1] to refer to access to ocean ports with international marine services for import and export of commodities. For export, the commodities can be shipped via trucks, trains [2] and/or pipelines [3] to a port, thereby opening the door to more lucrative prices on global markets. Getting to such a port is particularly important for landlocked jurisdictions seeking to expand and diversify markets for natural resources. [4]

Port maritime commercial facility

A port is a maritime commercial facility which may comprise one or more wharves where ships may dock to load and discharge passengers and cargo. Although usually situated on a sea coast or estuary, some ports, such as Hamburg, Manchester and Duluth, are many miles inland, with access from the sea via river or canal.

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Landlocked Athabasca oil sands

Canaport in New Brunswick, Canada is a tidewater petroleum facility CanaportLNG Long7.jpg
Canaport in New Brunswick, Canada is a tidewater petroleum facility

An example of the use of the term "tidewater" can be seen in the debate over exports of oil produced by the Athabasca oil sands. Upon separation from the sand, this bituminous oil, marketed as Western Canadian Select, is forced to sell at the price established for landlocked oil (see: West Texas Intermediate benchmark). If this oil were able to reach "tidewater" for export using oil tankers, it would presumably command a higher price (see: Brent Crude benchmark). Several pipelines have been proposed to bring the oil to "tidewater", including the Keystone XL project (via the Gulf of Mexico), the Enbridge Northern Gateway Pipelines project (via the British Columbia coast), the Mackenzie Valley Pipeline project (via the Beaufort Sea), or the Energy East pipeline project (via the Bay of Fundy). [1] [5] The Government of Alberta and the Government of Canada claimed a loss of $C4 – $C30 billion (CAD) in taxes and non-renewable natural resource royalties in 2013. In comparison, Maya crude oil,(Moore et al. 2011:2). [4] a similar product to Western Canadian Select, but located close to tidewater, is reaching peak prices. [2] In the United States, opponents of pipeline projects have expressed concern that pipeline construction and expansion would simply facilitate getting Alberta oil sands products to an American port for export to China and other countries via the Gulf of Mexico and that the resulting expansion in production in Alberta and consumption of fossil fuels worldwide would have a detrimental contribution to greenhouse gases. [6] Canaport is a receiving terminal for crude oil and LNG. There is a proposal to expand it to allow the export of inland oil delivered via pipeline.

Athabasca oil sands

The Athabasca oil sands are large deposits of bitumen or extremely heavy crude oil, located in northeastern Alberta, Canada – roughly centred on the boomtown of Fort McMurray. These oil sands, hosted primarily in the McMurray Formation, consist of a mixture of crude bitumen, silica sand, clay minerals, and water. The Athabasca deposit is the largest known reservoir of crude bitumen in the world and the largest of three major oil sands deposits in Alberta, along with the nearby Peace River and Cold Lake deposits.

Western Canadian Select is one of North America's largest heavy crude oil streams. It is a heavy blended crude oil, composed mostly of bitumen blended with sweet synthetic and condensate diluents and 25 existing streams of both conventional and unconventional Alberta heavy crude oils at the large Husky Energy terminal in Hardisty, Alberta. Western Canadian Select—which is the benchmark for emerging heavy, high TAN (acidic) crudes— is one of many petroleum products from the Western Canadian Sedimentary Basin oil sands. WCS was launched in December 2004 as a new heavy oil stream by EnCana, Canadian Natural Resources Limited, Petro-Canada and Talisman Energy Inc.. Husky Energy has managed WCS terminal operations since 2004 and joined the WCS Founders in 2015.

West Texas Intermediate grade of crude oil used as a benchmark in oil pricing

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as Medium crude oil because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of New York Mercantile Exchange's oil futures contracts.

See also

Keystone Pipeline oil pipeline

The Keystone Pipeline System is an oil pipeline system in Canada and the United States, commissioned in 2010 and now owned solely by TransCanada Corporation. It runs from the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas, and also to oil tank farms and an oil pipeline distribution center in Cushing, Oklahoma. The pipeline became well-known when a planned fourth phase, Keystone XL, attracted opposition from environmentalists, becoming a symbol of the battle over climate change and fossil fuels. In 2015 Keystone XL was temporarily delayed by then–President Barack Obama. On January 24, 2017, President Donald Trump took action intended to permit the pipeline's completion.

Alison Redford 14th Premier of Alberta

Alison Merrilla Redford, is a Canadian lawyer and former politician. She was the 14th Premier of Alberta, having served in this capacity from October 7, 2011, to March 23, 2014. Redford was born in Kitimat, British Columbia and grew up all over Canada and overseas before settling in Calgary as a teenager.

Kenneth Gardner Hughes is a Canadian politician. He served as a member of the House of Commons of Canada from 1988 to 1993. Later he was chair of Alberta Health Services from 2008 to 2011, before being elected to the Legislative Assembly of Alberta in 2012. He served in the provincial cabinet first as Energy minister, then as Municipal Affairs minister until resigning on 7 April 2014 to enter the Progressive Conservative Association of Alberta leadership election. Hughes withdrew his candidacy on 12 May 2014 in order to endorse the eventual winner, Jim Prentice and resigned from the legislature on 29 September 2014.

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Economy of Alberta

Alberta's economy is the sum of all economic activity in Alberta, Canada's fourth largest province by population. Although Alberta has a presence in many industries such as agriculture, forestry, education, tourism, finance, and manufacturing, the politics and culture of the province have been closely tied to the production of fossil energy since the 1940s. Alberta—with an estimated 1.4 billion cubic metres of unconventional oil resource in the bituminous oil sands—leads Canada as an oil producer. Revenue from oil and natural gas extraction has fueled a series of economic booms in the province's recent history, and economic spin-offs have included petrochemical and pipelines. In 1985 36.1% of Alberta's $66.8 billion GDP was from energy industries. In 2012, "the mining and oil and gas extraction industry made up 23.3% of Alberta's GDP." By 2013 Alberta's GDP was $331.9 billion with 24.6% in energy. The energy industry provided 7.7% of all jobs in Alberta in 2013.

Oil sands Type of unconventional oil deposit

Oil sands, also known as tar sands or crude bitumen, or more technically bituminous sands, are a type of unconventional petroleum deposit. Oil sands are either loose sands or partially consolidated sandstone containing a naturally occurring mixture of sand, clay, and water, saturated with a dense and extremely viscous form of petroleum technically referred to as bitumen.

BP Canada Energy Group ULC, is a Canadian oil and gas company headquartered in Calgary, Alberta, and a subsidiary of BP plc.

TransCanada Corporation company

TransCanada Corporation is a major North American energy company, based in Calgary, Alberta, in Canada, that develops and operates energy infrastructure in North America. The company operates three core businesses: Natural Gas Pipelines, Liquids Pipelines and Energy.

Canadian Association of Petroleum Producers

The Canadian Association of Petroleum Producers (CAPP), with its head office in Calgary, Alberta, is a lobby group that represents the upstream Canadian oil and natural gas industry. CAPP's members produce "90% of Canada’s natural gas and crude oil" and "are an important part of a national industry with revenues of about $100 billion-a-year ."

Petroleum industry in Canada

Petroleum production in Canada is a major industry which is important to the economy of North America. Canada has the third largest oil reserves in the world and is the world's fifth largest oil producer and fourth largest oil exporter. In 2015 it produced an average of 621,610 cubic metres per day (3.9 Mbbl/d) of crude oil and equivalent. Of that amount, 61% was upgraded and non-upgraded bitumen from oil sands, and the remainder light crude oil, heavy crude oil and natural-gas condensate. Most of Canadian petroleum production is exported, approximately 482,525 cubic metres per day (3 Mbbl/d) in 2015, with almost all of the exports going to the United States. Canada is by far the largest single source of oil imports to the United States, providing 43% of US crude oil imports in 2015.

The Ministry of Energy is a Cabinet-level agency of the government of the Canadian province of Alberta responsible for coordinating policy relating to the development of mineral and energy resources. It is also responsible for assessing and collecting non-renewable resource (NRR) royalties, freehold mineral taxes, rentals, and bonuses. The Alberta Petroleum Marketing Commission, which is fully integrated with the Department of Energy within the ministry, and fully funded by the Crown, accepts delivery of the Crown's royalty share of conventional crude oil and sells it at the current market value.

Connacher Oil and Gas Limited is a Calgary-based exploration, development and production company active in the production and sale of bitumen in the Athabasca oil sands region. Connacher's shares used to trade on the Toronto Stock Exchange, but it was de-listed in 2016, after filing for insolvency.

A benchmark crude or marker crude is a crude oil that serves as a reference price for buyers and sellers of crude oil. There are three primary benchmarks, West Texas Intermediate (WTI), Brent Blend, and Dubai Crude. Other well-known blends include the OPEC Reference Basket used by OPEC, Tapis Crude which is traded in Singapore, Bonny Light used in Nigeria, Urals oil used in Russia and Mexico's Isthmus. Energy Intelligence Group publishes a handbook which identified 195 major crude streams or blends in its 2011 edition.

Dilbit is a bitumen diluted with one or more lighter petroleum products, typically natural-gas condensates such as naphtha. Diluting bitumen makes it much easier to transport, for example in pipelines. Per the Alberta Oil Sands Bitumen Valuation Methodology, "Dilbit Blends" means "Blends made from heavy crudes and/or bitumens and a diluent, usually natural-gas condensate, for the purpose of meeting pipeline viscosity and density specifications, where the density of the diluent included in the blend is less than 800 kg/m3." If the diluent density is greater than or equal to 800 kg/m3, the diluent is typically synthetic crude and accordingly the blend is called synbit.

The United States is divided into five Petroleum Administration for Defense Districts, or PADDs. These were created during World War II under the Petroleum Administration for War to help organize the allocation of fuels derived from petroleum products, including gasoline and diesel fuel. Today, these regions are still used for data collection purposes.

The 2007 Alberta Royalty Review was an independent panel, chaired by William M. Hunter, established by the government of Alberta to review the level of resource royalties collected by the provincial government from petroleum and natural gas companies. In their final report entitled "Our Fair Share" released on September 18, 2007 the panel concluded that Albertans, who own their natural resources, were not receiving their "fair share" from energy development. Royalty rates and formulas had "not kept pace with changes in the resource base and world energy markets." As a result of the review new regulations came into effect under the Alberta Mines and Minerals Act including the Petroleum Royalty Regulation, 2009, and the Natural Gas Royalty Regulation, 2009. The government of Alberta expected to collect approximately $2 billion annually with new royalty formulas implemented in 2009. Instead of an increase in royalties on oil and gas, Alberta collected $13.5 billion less from 2009 to 2014 with the new formula. There was a flaw in the 2009 New Well Royalty Rate formula which was in effect by May 1, 2011, regarding the royalties on gas which had provided almost 67% of total royalties collected by Alberta prior to 2009. Under the 2009 formula applied to Natural Gas and By-products represented a decrease from the previous fixed rates. With this formula gas royalties declined by approximately $5 billion per year and provided only 17% of total royalties. In 2008 the global price of oil plummeted from an all-time high of $145 a barrel on July 8, 2008 to $32 a barrel later in 2008 resulting in "the cancellation of many energy projects" in Alberta. By 2015 several of these oil projects had not resumed. In spite of this, Alberta collected $2 billion in oil sands royalties in the post-2009 period with the new rate of 20% compared to $1.5 billion from 2004-2009 with the old rate of 15%.

Oil reserves in Canada

Oil reserves in Canada were estimated at 172 billion barrels as of the start of 2015 . This figure includes the oil sands reserves that are estimated by government regulators to be economically producible at current prices using current technology. According to this figure, Canada's reserves are third only to Venezuela and Saudi Arabia. Over 95% of these reserves are in the oil sands deposits in the province of Alberta. Alberta contains nearly all of Canada's oil sands and much of its conventional oil reserves. The balance is concentrated in several other provinces and territories. Saskatchewan and offshore areas of Newfoundland in particular have substantial oil production and reserves. Alberta has 39% of Canada's remaining conventional oil reserves, offshore Newfoundland 28% and Saskatchewan 27%, but if oil sands are included, Alberta's share is over 98%.

Canadian Natural Resources company

Canadian Natural Resources Limited, or CNRL or Canadian Natural, is a Canadian oil and gas exploration, development and production company, with its corporate head office in Calgary, Alberta. Along with its core area Western Canadian Sedimentary Basin (WCSB), CNRL also has North Sea and offshore West Africa fields. By 2011, with a production of 121,000 barrels (19,200 m3), CNRL was Canada's largest oil company and Canada's "single biggest conventional heavy oil producer". By 2009 CNRL ranked number 251 on the Forbes Global 2000 list.

Irving Oil Refinery

The Irving Oil Refinery is a Canadian oil refinery located in Saint John, New Brunswick. It is currently the largest oil refinery in Canada, capable of producing more than 320,000 barrels (51,000 m3) of refined products per day.

Railbit is a common blend of bitumen and diluent used for rail transport. Railbit which contains approximately 17% diluents or less. compared to 30% in dilbit. Dilbit can be transported through pipelines but railbit cannot. To prevent solidifying in lower temperatures, both raw bitumen and railbit require insulated rail cars with steam-heated coils. Because it has a smaller percentage of diluents, railbit crude requires special capacity rail unload terminals capable of loading railbit and of handling larger unit trains. By the fall 2013 approximately 25% had that capacity. The U.S. State Department in their 2014 Final Supplemental Environmental Impact Statement (SEIS) regarding the proposed extension to the Keystone Pipeline, acknowledged that,

[R]aw bitumen by rail could provide better netbacks than dilbit by pipeline. Dedicated rail cars, DRUs, and/or rail terminal equipment are needed to effectively transport rawbit, which explains why most producers opt for pipelines given current infrastructure. There are increasing reports of producers doing increased testing of the potential to ship rawbit.

The Trans Mountain Pipeline System, or simply the Trans Mountain Pipeline, is a pipeline that carries crude and refined oil from Alberta to the coast of British Columbia, Canada. "Trans Mountain pipeline system" and "Trans Mountain Expansion Project", TMX, are since August 31, 2018, part of a new "Trans Mountain Corporation", a wholly owned subsidiary of the Canada Development Investment Corporation, that is accountable to the Parliament of Canada. Up to this date, it was owned by the Canadian division of Kinder Morgan Energy Partners. The pipeline has been in use since 1953. It is the only pipeline to run between these two areas.

The Canadian Crude Oil Index (CCI) serves as a benchmark for oil produced in Canada. It allows investors to track the price, risk and volatility of the Canadian commodity.

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