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Oil strorage tanks that are part of the Chevron Burnaby Oil Refinery are shown on the shores of Burrard Inlet in this view from Burnaby, B.C. (ANDY CLARK/Andy Clark/Reuters)
Oil strorage tanks that are part of the Chevron Burnaby Oil Refinery are shown on the shores of Burrard Inlet in this view from Burnaby, B.C. (ANDY CLARK/Andy Clark/Reuters)


Trading in the dark: Crude supply data scarce in Canada Add to ...

Twice a week, helicopters belonging to a small U.S. company fly over the vast oil storage terminals in Cushing, Okla., and Patoka, Ill., to snap pictures.

Some of the photos are taken using infrared cameras, which can peer through the lids of the metal containers and snap an image of the oil stored inside. What they show is what no one outside of government can normally see: how much crude supply has backed up in the United States.

Storage information is a fundamental driver of crude prices. Market intelligence firm Genscape Inc. takes the infrared pictures and charges thousands of dollars per month to hedge funds and oil traders for the firm's reports, released 48 hours before official oil storage data is published free to the rest of the world by the U.S. Energy Information Administration. The weekly EIA report is widely watched by the energy industry, often moving oil prices if unexpected swings in oil storage are reported.

But in Canada, a country where oil and gas data has been described as a "black box," obtaining that kind of information is very difficult as the industry discloses few statistics on storage levels and government records are limited or dated.

The issue has come to light as markets attempt to discern how much oil has backed up in Canada after the closure of an Enbridge Inc. pipeline that ruptured in Michigan. If oil storage levels are exceeded, producers may be forced to trim output. Markets, however, are left largely blind as to where storage levels sit.

Demand for data on Canada's oil markets is strong enough that Genscape has begun test flights over Hardisty and Edmonton, which are Alberta's primary storage locations, and is preparing a data product for sale, according to vice-president Abudi Zein. "Definitely, Canada is on the radar," he said.

Despite the widespread interest, the Canadian government does not gather and publish figures on a broad spectrum of vital industry indicators, an omission that leaves traders, policy makers and researchers in the dark as they strive to react to shifting supply and demand. The data gap has grown in seriousness along with the importance of this country's crude.

Canada's oil sands are now the single-largest source of U.S. crude imports, and Western Canadian Select, an Alberta blend, has spawned several new futures contracts. International oil traders are among those pressing for better information on this country's oil as many of them increase their presence in Calgary, which is becoming an increasingly vital trading hub.

"We really need to have better information," said Peter Tertzakian, chief energy economist for ARC Financial. "Having weekly data is getting to be essential so we can assess what's going on in the business, the competitiveness in our business and the changes that are happening."

Those looking for up-to-date data on Canada's oil and gas are faced with numerous information gaps. Take Canadian crude exports. The National Energy Board, which collects that information, publishes it nearly a half a year late.

In addition, figures on oil storage levels are not readily available from any source. No one publishes a reliable current figure on natural gas storage, and no timely demand or inventory data exist for crude products like gasoline.

Critical Information

Alberta's Energy Resources Conservation Board (ECRB) tracks oil sands output, but publishes it months late. Information that is available must be cobbled together from a wide range of sources, including Statistics Canada, Natural Resources Canada, Environment Canada, the ERCB, the National Energy Board and the Canadian Association of Petroleum Producers.

The situation has forced researchers and traders to search for critical information. Some monitor the electrical output of oil sands mines, which generate power, looking for drops that could indicate production outages. Researchers at ARC Financial have written software that strips data from pipeline company websites to calculate oil production. Others maintain networks of contacts, collecting their own data by telephone and hoping the figures are accurate. BP PLC, which runs a substantial trading office in Calgary, actually owns terminal storage space, giving its traders proprietary information on inventory levels.

The data gap has spurred calls for change. The Canadian Gas Association, for example, has pushed Ottawa to form a Canadian equivalent to the U.S. Energy Information Administration, which while expensive - its annual budget runs to $111-million (U.S.) per year - provides a remarkable wealth of free information.

The Canadian government acknowledges that industry has petitioned for better numbers, and analysts credit both Statscan and Environment Canada with doing a better job of making energy stats available in recent years. However, Canada's industry is so small that some figures are impossible to publish without providing a window on confidential corporate data. Other information - including output levels - are collected by provinces, which use it for royalty collection, and only gather information monthly. Changing that system would require wrestling with jurisdictional issues.

The federal government has been loath to fund statistics-gathering that would benefit traders, in the belief that those who can profit from information can pay for it. And such data are far more important in the U.S., which is a prime player in setting world crude prices. Canadian crude is nowhere near as important.

No Help from the Government

Yet even those who profit from providing data say government needs to do more. Canadian Enerdata Ltd., for example, gathers and sells some information on natural gas storage, but it can't force companies to respond to voluntary surveys - and some players have refused to provide data. That has hurt the reliability of Enerdata's numbers.

"In order to have complete information, and to have resources devoted to getting the information out there, then the government should be involved," Enerdata president Richard Zarzeczny said.

But Mr. Zarzeczny's efforts to push the National Energy Board for a remedy have not succeeded. The board does not have a mandate to collect gas storage figures and, according to a spokeswoman, "adding new reports and data sources to the current energy information program would require additional resources."

Critics, however, say the status quo, where timely data remain difficult to acquire, hurts a country where energy plays such a critical role.

"I would argue that energy is one of the more important fundamental things in Canada," said Bryan Gormley, director of policy and economics at the Canadian Gas Association. "Energy as a traded commodity, for example, is often the No. 1 foreign-exchange earner for Canada. That's certainly not the case in the States."

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