Suncor ships first western crude to Europe

24 Sep 2014
Calgary Herald
DAN HEALING
CALGARY HERALD DHEALING@CALGARYHERALD.COM
Suncor ships first western crude to Europe
Oilsands giant Suncor Energy Inc. is sending its first ocean tanker loaded with western Canadian heavy crude to Europe, a company spokeswoman confirmed Tuesday.
Sneh Seetal said the shipment is being made from the port of SorelTracy on the St. Lawrence River in Quebec, but would not say who the buyer is, where or when the ship is going in Europe, how much oil is involved, whether the heavy oil originates in the oilsands or even whether it has all been produced from Suncor operations.
“This is the first shipment of western Canadian crude that we would have sent by rail to the Kildair terminal in Sorel-Tracy, Quebec, where it will be loaded on ships,” she said.
“But to be clear, our East Coast production has been exported for a long time, largely dependent on supply and demand and market conditions.”
She said the shipment is being made as part of Suncor’s marketing strategy to find new customers and is not necessarily going to be an ongoing operation.
“Canada and the U.S. would remain our key markets, but it is important that we establish alternate customers outside North America,” Seetal said.
Pipeline bottlenecks linked to the delay of the Keystone XL project have choked access of western Canadian oil to the U.S. market, leading to lower prices and rapid growth in crude-by-rail transportation.
Phil Skolnick, an oilsands analyst for Canaccord Genuity, said shipments to new markets including India and Indonesia are becoming more common as producers in Western Canada anticipate gaining tidewater access either by new pipeline construction or through rail-loading terminals.
“What’s unique about this is it’s the first time you’ve had western Canadian heavy crude shipped off the East Coast,” he said. “There has been some from the West Coast.”
The tanker is being loaded with 600,000 barrels of Western Canada Select crude, according to a Bloomberg report, which would be used to test refinery compatibility and markets in Europe.
Last spring, a cargo of western Canadian heavy oil was reportedly shipped by Spanish energy firm Repsol through an American port for testing in Spain.
The economics of transporting oil by rail to the East Coast and by tanker to Europe come down to the price difference between New York standard West Texas Intermediate and London-traded Brent, Skolnick said.
A large difference in the price per barrel would be needed to cover higher transportation costs and get full benefit of world prices for the oil.
Suncor has been shipping crude by rail to its 137,000-barrel-per-day Montreal refinery to displace more expensive sources and has said rail will be an important part of future marketing.

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on September 24, 2014, in Uncategorized and tagged . Bookmark the permalink. Leave a comment.

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