Oilsands Producers Can't Fill Gap If Venezuela Cuts Of Oil To U.S.

But shortages in labour and pipeline capacity might put a damper on that plan, he said. "I really don't think that we can ramp up production quickly. We don't have surplus production capacity." The already bitter relationship between Venezuela and the United States became even more tense on Sunday when president Hugo Chavez threatened to cut off oil sales to the U.S. The move was retribution for the freezing of $12 billion in assets belonging to Venezuela's state oil company, Petroleos de Venezuela SA. U.S. energy giant ExxonMobil, parent company of Imperial Oil Ltd. (TSX:IMO), challenged Venezuela's nationalization of a multibillion dollar oil project in U.S., British and Dutch courts. "If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States." The Toronto Stock Exchange's energy index was up by about two per cent Monday and major oilsands players appeared to be reaping the most benefits. EnCana Corp.'s (TSX:ECA) shares were up about 3.6 per cent over Friday's close and Suncor Energy Inc. (TSX:SU) saw its shares rise by more than two per cent. "If Chavez and his allies succeed in cutting exports to the U.S., I guess the price of oil will go up and that makes the tar sands more viable as economic concerns," said Laxer. Crude oil hit a one-month high of $94.72 on the New York Mercantile Exchange before settling at $93.59 Monday. The only way to get more Canadian crude oil to the United States would be to divert supplies headed to markets like Ontario southward - and that's something most Canadians will not stomach, Laxer said. ... http://ca.news.yahoo.com/s/capress/080211/business/venezuela_oil_canada

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