Canadian oil producers must seek new export markets in Asia and elsewhere because the chances of TransCanada Corp.’s U.S.-bound Keystone XL pipeline getting built are dwindling, said Continental Resources Inc.’s Chief Executive Officer Harold Hamm.
Rising oil output from U.S. formations such as the Bakken in North Dakota and the Permian Basin in Texas is blunting the need for crude from the oil sands of Alberta that would flow through the Keystone conduit, Hamm said today at the Bloomberg Link Oil & Gas Conference in Houston. As the biggest owner of drilling leases and most-active driller in the Bakken shale, Continental competes with Canada’s oil-sands producers among U.S. refiners.
Alex Pourbaix, TransCanada president of energy and oil pipelines, yesterday said the Calgary-based company doesn’t expect a U.S. government ruling on the proposed $5.3 billion pipeline until next year. U.S. demand for Canadian oil may dry up by the time the project is approved, Hamm said.
“America’s not going to be that golden market down here any longer,” Hamm said during the conference today. “Canada’s going to have to plug into” expanding foreign energy markets including China.
The Keystone project has been delayed for more than a year by environmental concerns about the proposed route through the U.S. Great Plains.
Pourbaix said that Hamm has previously derided the Keystone project “for effect.”
“Harold certainly has strong opinions,” Pourbaix said in remarks to reporters during an energy conference in Calgary yesterday. “Any suggestion that Keystone is not needed just is really not looking at the basics of supply and demand in North America.”
Hamm said today that 75 percent of Oklahoma City-based Continental’s crude is being transported to refiners on railroad cars. The company began increasing its reliance on rail during the final three months of last year because of a dearth of available pipeline capacity, according to a U.S. Securities and Exchange Commission filing.
Hamm, 67, said the U.S. prohibition against exporting domestic oil that dates to the Arab embargo of the 1970s must be abandoned so that swelling output from the Bakken and other regions can find the highest-priced markets.
“It’s an archaic law,” Hamm said. “Closed societies don’t work.”
Continental shares rose 60 percent this year, compared with a 22 percent increase in the Standard & Poor’s 500 Index.