Friday, August 22, 2008

Maybe Tar Sand Oil From Canada Is Too Expensive To Refine In Wisconsin

Pretty quiet on the Murphy Oil expansion front in Superior; sources say the much-rumored $6 billion expansion to expand refining seven-fold at the Murphy Oil facility is on the back burner because tar sand extraction in Canada, the source of refinery's crude stock, is still too expensive to bring a decent return to investors.

Sure, oil is still a hefty $120 a barrel, and was over $140 earlier this year, but it costs $1 a barrel to recover oil in Saudi Arabia and $75-$90-per-barrel in northern Alberta province, a CNN analyst points out.

Where do you think investors would prefer to put capital?

That's not to say that the expansion won't come about, leaving northern Wisconsin with the promise of both jobs and dirtier air above a potentially-polluted Lake Superior below.

Oil refineries have pretty big smokestacks and pipeline connections in and out that can leave a mess behind if things go wrong.

A significant delay in the construction and expansion plan - - the end of this year had been the probable start for the multi-year, multi-billion dollar refining ramping-up from 35,000 barrels a day to 235,000 - - would give the alternative energy generation movement time to move forward.

Wisconsin is embarking on research, development and production goals that would make the best of the state's natural resources and brainpower: the lower the price of oil, the less likely is the refinery expansion, and the more probable that there can be a substitution of more sustainable substitutes in a greener future.

No comments: