An Eager Buyer

Syncrude Canada Ltd. Ever heard of them? Well, if you have been following the presidential race at all, you should have.

Syncrude is a joint venture firm established in Fort McMurray Alberta, Canada. The firm specializes in the production of oil and gas, specifically from the Athabasca oil sands region. The joint venture is a cooperative effort between seven partners. These include Canadian Oil Sands Limited, Imperial Oil, Suncor Energy, Sinopec, Nexen, Mocal, and Murphy Oil.

Now, with all that blah blah blah aside, what does Syncrude have to do with anything I wuld want to write about?

Well, here is how it breaks down:

Syncrude is the first company to establish, drill, process, and refine oil from the Athabasca and Alberta oil sands region. For those of you who are unfamiliar with the oil sands, they are a heavy density form of petroleum that is (amazingly) difficult to transport, process, and manage.

Syncrude, however, has been conducting business up in Canada with relative ease for a while now. They started drilling during the 1970s within the Alberta oil sands region and have had success within the area since. In fact, today they are posed be one of the largest producers of oil within North America, at least in the near future.

That is to say, depending upon how the U.S.’s energy plan goes.

You see, the Athabasca Oil Sands are a pivotal region in what has become known as the keystone XL pipeline debate. Now, we are all so familiar with this chat of the keystone XL, that for many of us it is nauseating at this point. However, it is worth pointing out that the keystone XL is by and large designed to transport oil from the tar sands. This oil is heavy, thick, and viscous. In fact, it is drastically different than transporting lighter crude petroleum in not only an infrastructure, but also an energy drain necessary.

So, the development of the keystone XL pipeline really plays a huge role in whether or not a company like Syncrude will prosper at home in the future…

Or does it?

You see, Syncrude recently sold some of its shares (more accurately ConocoPhillips sold some of its shares in Syncrude) to Sinopec. Sinopec is a Chinese (state run) oil company that has been invested in North America expansion for some time now (look at Chesapeake Energy’s history). Sinopec. This puts an interesting twist on what we thought was a North American bound story.

So, this big story that has become the keystone XL pipeline, whether or not the U.S. will ‘support’ North American energy development has been rendered almost a side-show. Now, with a new set of energy-hungry Chinese partners, Syncrude will undeniably have a market to sell to regardless of who is buying. After all, piping to Vancouver is far shorter than piping to the Gulf Coast.

Does this mean the U.S. and Canada’s trading partnership will decline with respect to energy? Perhaps. With a new, more accommodating trading partner, perhaps North American energy independence is something that the whole continent isn’t looking for?

Just a thought.

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