Published in Oil Industry News on Friday, 29 May 2015
Canadian heavy crude prices strengthened for a third day as Alberta forest fires kept 10 percent of oil sands output offline and threatened production facilities.
Western Canadian Select’s discount to U.S. benchmark West Texas Intermediate shrank 75 cents to $8 a barrel, the narrowest in two weeks, data compiled by Bloomberg show. WCS’s price rose 92 cents to $48.68 a barrel.
“For sure, you’ve got some supply coming offline there,” Michael Loewen, commodity strategist at TD Securities in Edmonton, said in a phone interview Thursday. “We will probably see some strengthening in the WCS spread.”
Northern Alberta firefighters are battling a wildfire near Cold Lake that’s 20 kilometers from a Cenovus Energy Inc. oil sand site and 5 kilometers from one belonging to Canadian Natural Resources Ltd., Scott Long, an executive director at the Alberta Emergency Management Agency, said in a news conference Wednesday.
The companies have shut facilities, curtailing a combined 230,000 barrels a day of oil-sands production, about 10 percent of Canada’s output. Cenovus has shut the 135,000-barrel-a-day Foster Creek project. Canadian Natural closed its 80,000-barrel-a-day Primrose facility and cut output at its Kirby South operation by 18,000 barrels a day.
The disruptions came as Canadian heavy crude prices have been at their strongest relative to WTI in five years. WCS has traded less than $10 a barrel below the benchmark every day this month, the longest period for such a discount since 2010, data compiled by Bloomberg show.
Cenovus Site
The Cold Lake fire grew to 27,000 hectares (67,000 acres) from 20,000 on Wednesday because of wind and back burning by fire fighters, Forest Information Officer Leslie Lozinski said in an update posted on the Alberta’s Environment and Sustainable Resource Development agency website.
A second fire to the north near Chard covered 3,300 hectares Thursday and prompted MEG Energy Corp. and Statoil ASA to evacuate some staff from nearby oil sands operations, Lozinski said. A five-person gas well was also evacuated, Lozinski said.
Source: www.bloomberg.com