Keystone Looks More Critical Thanks to Venezuelan, Mexican WoesBy
Gulf refineries depend on heavy crude from two nations, Canada
Oil-sands supplies rising, helping offset decline from others
After clearing a major regulatory hurdle in Nebraska, the case for building the Keystone XL pipeline can count on troubles many miles south as one of its strongest arguments.
Withering supplies of heavy crude from Venezuela and Mexico are making U.S. Gulf Coast refineries more dependent on the thick, sticky bitumen that Keystone XL would carry from the Canadian oil sands. That’s the kind of oil those refineries were built to process, and adapting them to the light grades that are pumped from American shale fields requires costly revamping work.
Since the start of the decade, U.S. imports of heavy crude have fallen by more than a third from Venezuela, and by almost half out of Mexico, according to data compiled by Bloomberg. Years of underinvestment, mismanagement or simply declines in petroleum reserves have taken their toll in both countries. Meanwhile, Mexico’s drive to lure oil majors to develop its deep-water reserves may take years to translate into more production.
Canada’s gone in the other direction, as companies have poured billions of dollars into new projects in the oil sands region where Keystone originates. U.S. imports from its northern neighbor have almost doubled since 2010, with more expected to flow if the pipeline is ever completed.
The XL pipeline would be an expansion of TransCanada Corp.’s existing Keystone system.