From: The Motley Fool
October 6, 2013
Yes, you read that headline correctly. In spite of surging
production from the Alberta oil sands, Canada is in the midst of an oil
shortage. But for the savvy investor, this represents a potentially
profitable opportunity.
The condensate conundrumNorth
of the border, energy production is surging. According to the Canadian
Association of Petroleum Producers, bitumen output from the Alberta oil
sands is projected to double by 2022 to 3.8 million barrels per day. The
problem with bitumen is that it's too thick to flow freely on its own.
It must be mixed with a super-light oil called condensate so that it can
be shipped through pipelines.
With growing oil sands production, condensate demand is poised to
sky-rocket as well. Based on estimates provided by the Energy Resource
Conservation Board, the demand for condensate in Alberta could double to
650,000 bpd within the next decade. Today, condensate is the most
prized hydrocarbon in Alberta with the light oil trading for a 10%
premium over West Texas Intermediate. Analysts fear shortages could
result as imports struggle to keep up with demand.
Yet south of the 49th parallel, the United States is facing a
condensate glut. In the Texas Eagle Ford, condensate production accounts
for as much as 30% of output. With forecasters projecting Eagle Ford
production to exceed one million barrels per day by next year, much of
that will be condensate. MORE
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