Canadian Crude Prices Hit by Keystone Pipeline Shutdown
05 Noviembre 2019 - 03:51PM
Noticias Dow Jones
By Vipal Monga
The price of Western Canadian Select crude oil is reeling as
Canadian oil producers struggle with the continuing shutdown of TC
Energy Corp.'s Keystone pipeline.
Barrels of WCS were trading at $34.51 Monday afternoon, down
from $38.20 on the previous Wednesday -- the day after Keystone
pipeline spilled more than 9,000 barrels of oil in northeastern
North Dakota. The spill, which the company said was enough to fill
half of an Olympic-size swimming pool, forced the shutdown of a
main artery taking Canadian oil from the province of Alberta to
refiners in the U.S. Midwest.
Monday's price for Canadian crude represents a $22.05 discount
to U.S. benchmark West Texas Intermediate prices, the most since
December 2018, said Laura Huchzermeyer, a managing editor for the
Americas Crude team at S&P Global Platts.
"This underscores how Canadian energy is held hostage to just a
small number of pipelines," said Michael Tran, an energy analyst
for RBC Capital Markets.
Closing the Keystone pipeline reduces the ability of producers
to move 590,000 barrels a day out of Alberta. That has prompted
executives, who have long complained about Canadian governments'
inability to get new pipelines approved, to scramble to fill the
gap.
Richard Kruger, chief executive of Exxon Mobil Corp.'s Canadian
unit, Imperial Oil Ltd., said the Keystone pipeline is a big part
of the company's takeaway options. "So when something like that
happens in a system that's tight, it's all hands on deck for what
do you do to keep barrels flowing," he said during a Nov. 1
conference call.
The company doesn't reveal how much oil it ships through
Keystone, but Mr. Kruger said during the call that the province has
room to add about 12 million barrels to inventories, meaning
Alberta's producers could reach a limit if TC Energy doesn't get
the pipeline flowing again by mid-November.
In 2017, TC Energy needed 12 days to fix Keystone, after the
pipeline leaked more than 5,000 barrels of oil in South Dakota.
A TC Energy spokesman said there is no word yet on when Keystone
will be operating again. The company said on its website Monday
that 200 people are working around the clock to fix the leak and
clean up the spill. The company expects to dig up and extract the
damaged section of pipe by the end of this week.
Though the pipeline is shut from Alberta to Oklahoma and
Illinois, it remains open on its southern leg from Oklahoma to the
Gulf Coast.
The pullback in Canada's oil price is negating much of the
effect of oil-production cuts imposed on the industry last year by
Alberta's provincial government. In 2018, the lack of pipeline
space caused the discount to reach a record difference of more than
$51 a barrel last October, but it then narrowed to less than $7 by
January of this year after the government of Alberta forced
producers to cut output in a move to reduce oil inventory.
Companies have been exporting more oil by rail in recent months.
Calgary-based Cenovus Energy Inc.'s chief executive, Alex Pourbaix,
said last week that the company had moved an average of more than
80,000 barrels a day by rail to the U.S., up from an average of
36,000 in June.
The company wants to reach 100,000 barrels by rail by the end of
the year. Canadian National Railway Co., said it transported
180,000 barrels a day in September. It has capacity to move about
300,000 a day.
Write to Vipal Monga at vipal.monga@wsj.com
(END) Dow Jones Newswires
November 05, 2019 16:36 ET (21:36 GMT)
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