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Hey, oil industry: If market access is the defining issue of the day, how come so few CEOs admit to having problems with market access?

Collectively, the energy sector and provincial and federal governments say often that Canada is losing out on tens of billions of dollars a year in potential revenue as heavy crude oil gets slapped by the market with bargain-basement discounts.

The reason is insufficient pipeline capacity to places on North American coasts that would pay up for Canadian crude delivered in large volumes, or offer a clear few days' sailing to other, more lucrative shores.

Heavy oil and bitumen from the oil sands will almost always trade at some discount to benchmark light crude based on the pricey and complex extra equipment refineries need to process the stuff, transport costs and other factors.

The argument is that with unlimited transport capacity to more markets on pipelines such as Keystone XL, Northern Gateway, Trans Mountain's expansion and Energy East, other major pressures will be lifted from Canadian heavy oil prices once and for all, keeping the spread narrow. The main pressures are the potential for supply gluts within Western Canada and landlocked North American oil being the sole pricing yardstick.

A lot of oil patch leaders, though, make a point of saying that while market access is a huge issue for industry and country, there is enough pipe space for their own companies. At least for now.

Take Lorraine Mitchelmore, president of Royal Dutch Shell PLC's Canadian business. On Wednesday, she spoke with reporters about Shell's extensive set of operations, from oil sands projects to refineries to gas stations. Its next major oil sands project is the 80,000-barrel-a-day Carmon Creek project in the Peace River area of Alberta.

Market access? Not a problem today, and Shell's not even a big player in the burgeoning oil-by-rail business. Down the road, the company has options for capacity on TransCanada Corp.'s Keystone XL and Energy East projects.

"Shell is in a different position, because Shell is a fully integrated company. We are integrated all the way … from the mine to the customer, so market access doesn't weigh so much on us," Ms. Mitchelmore said. "But of course in the long term, with that total portfolio that we've got, it's important that we get market access."

Commentary from Suncor Energy Inc. chief executive Steve Williams is similar. Canada's biggest energy company has a relatively easy time moving its oil around, due to its expertise with logistics and pipeline capacity contracts, Mr. Williams says.

"If I come back to the industry level, we're supporters of all the market access projects, we are supporters of Gateway, we are supporters of Keystone. We are supporters of the proposals to convert the gas system [to oil] to the east of Canada. We've been working and continue to work with all of those projects," he said during Suncor's quarterly conference call at the end of last month.

"We don't have a serious market issue, access issue, through the growth plans we're talking about through the next five years. That's because we built the flexibility in."

Imperial Oil Ltd. CEO Rich Kruger says his company has all the pipe space it needs for the current phase of the Kearl oil sands project. Asim Ghosh, Husky Energy Inc.'s chief, says he's signed on to four of the major new pipeline proposals, although he's confident he has enough space to meet needs through the end of this decade. Those needs will increase this year with the startup of the Sunrise oil sands development.

The fact is, some of the market-access issue relates to price, rather than the physical movement of crude. That means the integrated oil companies may be able to ship their barrels to refineries in traditional markets in Canada and the U.S. Midwest, although returns in their production divisions are thinner than they'd like.

However, their own refineries can sop up the cheap feedstock, process it and sell it at wide margins. Mr. Ghosh has said often that Husky's integrated structure allows the monetary benefit to move back and forth between the operations like a pendulum.

Perhaps another factor is a CEO's need to make sure investors believe that the boss and executives have the situation well in hand, regardless of the regulatory and political delays that face major pipeline proposals.

It's quite a balancing act: Warning that there's a major problem facing the entire sector and at the same time telling shareholders there's no need to panic.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
A-N
Agilent Technologies
-0.94%146.09
B-N
Barnes Group
-0.36%36.44
ENB-N
Enbridge Inc
0%35.52
ENB-T
Enbridge Inc
+0.06%48.09
IMO-A
Imperial Oil Ltd
+0.39%67.64
IMO-T
Imperial Oil
+0.22%91.56
SU-N
Suncor Energy Inc
+0.72%36.34
SU-T
Suncor Energy Inc
+0.61%49.16
TRP-N
TC Energy Corp
+0.17%40.28
TRP-T
TC Energy Corp
+0.06%54.52

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