Many countries have very heavy crude oil and it can only be used to refine certain products. Saudi crude cannot be used for gasoline production because of this. Mexico and Venezuela also have almost all of their oil as heavy crude. It can be used to produce heavy bunker oil used in ships and asphalt production. In Canada's Alberta oil patch, the oilsands is also very heavy crude and must be refined in an upgrader to allow it to become a very light crude then be refined into gasoline and other light oil products. It costs a great deal more time and money to refine the heavy crudes into light grade products..A certain percentage of very heavy crude is also lost in the double refining process which is one reason it brings a much lower price.
When normal West Texas Intermediate ( WTI ) crude was selling for $75 a barrel a few months ago, the heavy oilsands crude of northern Alberta was worth only $28 a barrel on the market. Therefore asking Saudia Arabia to increase very heavy oil production to try to help out with high gasoline prices makes no sense when you understand the basics. Saudi crude is no good for gasoline production.
Husky Oil, a Calgary, Alberta based company, which is more than 50 percent owned by the Chinese for the past 3 years, just bought a half share in a refinery in Ohio. They spent about 2 months rejigging the refinery in early 2008 with it's American partner and will be sourcing the crude from Alberta. The agreement with their partner is that they will not get any refined products for the first 2 years which means all the finished gasoline, diesel, home heating oil, jet fuel and propane that this plant will produce, will go only to it's American customers and none to Canada. This is partly Chinese money that has help made this possible. Whatever your opinion is of that, this will be a big help in the summer supply of all fuels.
Another huge bit of good news this week was that the very first new refinery was approved in South Dakota on Monday. This will again use Canadian oil from Alberta shipped by pipeline to refine 400,000 barrels per day. It is expected to be online by 2013 because of all the tree huggers who will fight every approval along the process.
The March 2008 USGS oil study of the Bakken Basin oil underneath N. Dakota and Montana is half of the 200,000 square miles of the Bakken oil with half on the Canadian side of the border. It contains at least 200 billion barrels of oil under the American states. It is the highest quality of crude in the world in N. Dakota rated at 41 degree API rating. When you see the price of oil quoted every day, only that grade will bring that quoted high price. All Saudi heavy oil brings a much lower price and they have a hard time selling it because only some refineries are capable of refining it. Even much of Iran's oil is refined outside the country.
If you want a long term good paying job for life, go work in the oil patch in N. Dakota, Montana, southern Saskatchewan or southern Manitoba which is where the Bakken basin oil patch covers 560,000 square kilometers. The Province of Saskatchewan has beaten all other jusridictions in N America, by offering an oil royalty tax holiday for the first 35,000 barrels of oil from each oil well.
It is only a 100 mile drive to the Canadian border in the parts of the oil patch in N Dakota where you can buy real beer. And beaver tails.
And thank GOD that HE blessed us both with this huge amount of best quality oil. For the next 20 years, one investment that will remain stable is in the oil services industries. The demand will be there for those companies but the price of oil will not affect the demand for oil service companies. Invest accordingly to avoid the oil price drops.
A former member of the S.A.E. (Society of Automotive Engineers), Mark Smyth has had a lifelong love for machinery. Driving a tractor on his family farm at age 4, he raced boats and cars during the 1960s and 1970s, both powered by gasoline and alcohol fuels. Having even used hydrazine (rocket fuel) as a fuel additive in drag racing, Mark learned all about synthetic lubes from a chemist who developed the very first synthetic lube oils to be certified for U.S. military specs back in 1952.
