Canada's oil industry will have a hard time boosting oil and refined products exports to the United States to help avert shortages, because it is already pumping near capacity, top executives said Tuesday.
TORONTO — Canada's oil industry will have a hard time boosting oil and refined products exports to the United States to help avert shortages, because it is already pumping near capacity, top executives said Tuesday.
Canada's energy sector pledged to find ways to send more supplies to the United States after Hurricane Katrina crippled U.S. Gulf of Mexico production and refining operations, sending crude prices soaring.
Prime Minister Paul Martin said nearly two weeks ago that Canada would send another 91,000 barrels of crude to U.S. refineries as part of an International Energy Agency initiative, although much of that would have to come from reduced domestic demand in response to the high prices.
With oil prices above $60 a barrel and natural gas at more than $10 per million British thermal units, analysts have said energy companies are squeezing out every molecule they can.
"I would think that would be a fair representation," Harry Roberts, Petro-Canada's chief financial officer, told reporters at a Peters & Co. energy conference in Toronto.
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"There is a challenge, I think. It really depends on how the regulators want to deal with the amount of flow in the pipes. But there's not a lot of, especially oil, capacity."
More than two weeks after Katrina, 56 percent of U.S. Gulf oil and 37 percent of natural gas production remains shut off, according to the U.S. Minerals Management Service. About 900,000 barrels a day of refining capacity is also down.
Canada is already one of the top foreign oil suppliers to the United States, rivaling such other producers as Saudi Arabia, Venezuela and Mexico. It normally exports around 1.6 million barrels a day to U.S. refineries.
After Canada pledged to raise exports, Alberta's Energy & Utilities Board lifted conservation limits on oil wells in the country's biggest producing province in an effort to boost output by a relatively small 30,000 barrels a day.
"That might make a very small difference but the production capacity in the West is essentially at full capacity as we speak," said Ian Kilgour, head of exploration and production for Shell Canada Ltd.
One big source of production is about to restart this month following a long outage. Suncor Energy Inc.'s oil sands plant in northern Alberta is expected to be back at capacity rates of 225,000 barrels a day after a January fire cut output in half. An expansion will boost that to 260,000 by year end.
Shell had originally planned a major turnaround this autumn at its 155,000 barrel a day oil sands upgrader that would have cut output by 40 percent for a month.
But in July, the company decided to push most of that work into 2006, so output will only be down by 10 percent for two or three weeks in the fourth quarter, officials said.
To help shore up U.S. supplies of gasoline and other petroleum products, Canada's oil industry said it may consider deferring maintenance outages at some refineries, but opportunities to do that are scarce, executives with the oil majors said.
Imperial Oil Ltd., which is 69.6 percent owned by Exxon Mobil Corp., had already pushed back a turnaround at its 112,000 barrel a day Nanticoke, Ontario, refinery before Katrina damaged U.S. facilities, vice-president and controller Paul Smith said.
Petro-Canada completed major maintenance at its refineries in Edmonton, Alberta, and Montreal earlier this year and has nothing else planned before the end of the year, Roberts said.
Source: Reuters
