Maintenance at oilsands facilities may achieve what Alberta’s mandatory production curtailments have so far failed to accomplish: drain Western Canada’s storage tanks.
Inventories in the region were 34 million barrels the week before last, Rich Kruger, Imperial Oil Ltd.’s chief executive officer, said in an earnings call Friday, citing Genscape data.
That figure is little changed from when Alberta’s outgoing government announced mandatory production cuts at the beginning of December to alleviate a glut.
While inventories did fall initially to about 28 million barrels in February, they started to rise again after the price of heavy Canadian crude strengthened to within $10 of West Texas Intermediate futures, making it uneconomic to ship by rail, the one alternative to clogged pipelines.
“This could be a time when production wanes and inventories come down,” Kevin Birn, IHS Markit’s director of North American crude oil markets, said by phone.
Heavy Canadian crude prices have weakened a bit this month, with Western Canadian Select’s discount to futures widening to $13 a barrel Tuesday. The wider gap has facilitated more rail shipments, which will rise to between 165,000 barrels and 175,000 barrels a day in April from 150,000 in March, Imperial’s Kruger said.
“We think some of the major spring maintenance activities, particularly at the mines, may help to alleviate some of the pressure over the next couple of months,” Kruger said Friday.
Here is some of the planned oilsands maintenance this spring and summer:
© 2019 Bloomberg L.P
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