While we're struggling with high oil prices in the U.S., there is an oil source closer to home that we are having a hard time accessing. I'm not talking about drilling in Alaska; I'm referring to the Canadian oil sands that are being drilled by Canadian companies Suncor (NYSE: SU ) , Cenovus Energy (NYSE: CVE ) , and Canadian Natural Resources (NYSE: CNQ ) .
Currently, oil from Canada must take a winding road from the oil sands through Minneapolis or Wyoming to the refineries on the Gulf Coast. One oil pipeline operator, TransCanada (NYSE: TRP ) , is taking steps to ease the situation. Last year, the company's Keystone Pipeline Project converted an indirect natural gas pipeline to a crude oil pipeline and extended it from Steele City, Neb., to Cushing, Okla., a major oil marketing/refining hub. The company is now pitching U.S. regulators on a new oil pipeline, the Keystone XL, to bring oil directly from the oil sands through Montana, South Dakota, and Nebraska to meet up with the expansion pipeline to Cushing.
TransCanada is also pitching regulators on an expansion from Cushing to Houston and the Gulf Coast, with the goal of bringing more oil at less cost to refineries on the coast. Another group of pipeline operators has a similar idea. In early May, Enterprise Products Partners (NYSE: EPD ) and Energy Transfer Partners (NYSE: ETP ) announced they are forming a joint venture to build an oil pipeline from Cushing to Houston.
The Keystone XL project might get a boost soon as House Republicans are working on a bill to expedite the project. In any case, if one or both projects are approved, the increased pipeline capacity will help oil sands producers sell more oil in the U.S. and be a boon for the pipeline operators.
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