Cenovus Energy Inc. is limiting production from its oil sands projects in Alberta, citing the suppression of bitumen values by transportation bottlenecks (OGJ Online, Feb. 21, 2018).
“When Canadian heavy oil is selling at a wide discount to West Texas Intermediate (WTI) due to transportation bottlenecks, we have significant capacity to store barrels in our oil sands reservoirs to be produced and sold at a later date when pipeline capacity improves and differentials narrow,” Cenovus Pres. and Chief Executive Officer Alex Pourbaix said in a press statement.
Since February, he said, the company has reduced production from its Christina Lake and Foster Creek thermal projects while injecting steam at normal rates.
Production capacities are 210,000 b/d at Christina Lake and 180,000 b/d at Foster Creek.
The Cenovus statement projected first-quarter oil sands production of 350,000-360,000 b/d.
The statement said the strategy will affect monthly production rates but did not change the company’s projection for average oil sands output in 2018 of 364,000-382,000 b/d.
Last month, the Alberta government said transportation problems have prevented the province from benefiting from the recent rise in global oil prices.
The normal discount of Western Canadian Select (WCS) crude to WTI widened after a 2-week shutdown last November of TransCanada’s Keystone pipeline, which has operated below capacity rates since restarting. The other major pipeline for export of oil sands production, the Enbridge Mainline system, is at capacity.
Rail transport has responded slowly.
Since November, the provincial government said, the WCS-WTI different has doubled to $28/bbl.
“Alberta heavy oil producers are currently forgoing an estimated $30-40 million/day in revenue as a result,” it said.