Canada’s fast-growing oil sands industry already means millions in sales for a smattering of Buffalo Niagara companies, from Graham Corp. in Batavia to Conax Technologies in Cheektowaga.
And Consul General John F. Prato thinks the oil sands in western Canada could be a great opportunity for new business for dozens of other companies in Western New York.
“There’s an opportunity there,” Prato said as the Consulate General of Canada in New York and the U.S. Commercial Service hosted more than 80 companies and a standing-room-only crowd of 200 businesspeople Monday at a matchmaking event at the Buffalo Club.
“And the more people know about it, the more opportunities they will know,” Prato said.
Canada’s oil sands production will more than double, to 4.5 million barrels a day, by 2025, according to the Canadian Association of Petroleum Producers. Already, 40 New York companies, most from Western New York, are working in the oil sands region, and Prato said there are ample opportunities for many more local firms to become involved.
Graham Corp., for instance, got nearly $4 million in business from work in the Canadian oil sands during the final three months of last year – 17 percent of its total revenue for the quarter, said James R. Lines, the Batavia manufacturer’s president and CEO.
“That’s a very important market for us,” Lines told investors last week during a conference call.
Much of Graham’s work in the oil sands industry comes from supplying equipment used in machinery called upgraders. Those projects are significant for Graham because they can involve anywhere from $4 million to $6 million in work on every order, although the company has never seen more than two of those projects within an 18-month period.
“So it’s very important, but in terms of being a disproportionate amount of our sales mix, I don’t see that changing in going forward,” Lines said.
Conax gets more than 20 percent of its revenues from temperature sensors that it makes for oil sands producers, Prato said.
So does Ascension Industries, of North Tonawanda, which makes compressors and lube oil systems for the oil and gas industry.
The oil sands industry, which is centered in Alberta, dovetails with many of the Buffalo Niagara region’s strengths, from manufacturers that are skilled in producing pipes, coils, valves and fluid technology, to engineering services and environmental work, Prato said.
“Manufacturing is in your DNA. When people think of Buffalo, they think of manufacturing,” he said. “Your engineering base is very difficult to replicate. And you have the experience with the environment.”
The Canadian oil sands region, which is home to the world’s third-largest proven oil reserve, is at the heart of the debate over the Keystone XL pipeline. The $4.5 billion project to build a 1,200-mile pipeline stretching from Alberta to Texas “is unlikely to significantly impact the rate of extraction in the oil sands,” according to a U.S. State Department report issued Friday. If the United States does not approve the pipeline’s construction, trains would likely transport that crude oil to American markets, the report said.
The oil sands also have raised environmental concerns. The State Department report noted that crude oil from the Canadian oil sands would increase greenhouse gas emissions by about 10 percent, compared with the Mexican or Venezuelan oil it likely would displace in U.S. refineries.