oilpatch scrambles to ship \'distressed barrels\' as industry loses $100 million in revenues daily
by：Marslite
2019-10-05
CALGARY —
The Canadian oil company is scrambling to find a place to store or ship their \"buckets of trouble\", a record --setting US$50-
Discount per barrel, which accounts for a large proportion of their production. Calgary-
S. -based heavy oil producers have been trying to hedge, looking for more rail vehicles or storage space.
The main export system is blocked by some companies that bid for more space than the system can hold. Last week, the benchmark price of heavy oil in Western Canada compared with the median price in western Texas, $50 a barrel.
The main line of Enbridge is moving.
Canadian crude oil production is 8 million barrels per day in the summer, but this does not necessarily mean that the daily production of these crude oil will hit a record.
Set discounts.
Some of them are turning to a firm commitment contract to bring prices closer to the U. S. benchmark.
\"The barrels moving on the main line of Enbridge are actually spot barrels.
This is the difference between $40 and $50 a barrel, \"Tudor Pickering Holt and Co.
Analyst Matt Murphy said.
Rory Johnston, commodity economist at Scotiabank, said, \"there is a tiered discount for the entire chain,\" but he said he was not sure how many barrels would be affected by a massive discount.
The price confusion has led to an increase in the amount of oil transported by rail, and Johnston said that by the end of this year, the amount of oil transported by rail will rise from the current 200,000 barrels/day to 300,000 barrels/day.
The current high volatility in WCS pricing is laying the groundwork for another difficult month in November.
The WCS is trading at $46.
75 barrels on Monday.
\"At the end of next week, Enbridge said, \'This is everyone\'s share in the spot market, \'and all the outstanding things are in trouble,\" Vice President Kevin Byrne said.
President, North American crude oil market, IHS Markit.
\"Every month, as the number of bad barrels increases, the value of these bad barrels decreases, and buyers of these barrels know it, so every month they can exercise more power on it, birn said, under the current differences, oilby-
Trucks can be an economic option for some companies.
This led to Calgary-
US-based oil producersS.
The refinery and Enbridge changed the way pipeline companies operated their main pipeline systems in 2020, possibly moving from nomination procedures to long-running systemsterm contracts.
Many of these customers are angry at Enbridge as it tries to change the nomination process earlier this year to increase oil shipments in the short term
Real-time policy changes that caused the WCS market to wave for many consecutive days at the beginning of 5.
Tracie Kenyon, an Enbridge spokesman, said the company would not comment on private business discussions with customers.
Meanwhile, Calgary-
Oil producers are snapping up more rail capacity or trying to hedge at higher prices.
\"We are reducing exposure to wider light --
Cenovus Energy Inc. brings our products to the market by adopting a combination approach, which is very different.
Spokesperson Sonia Franklin said in an email.
At the end of September, Cenovus signed an agreement with two major Canadian rail companies to ship 100,000 barrels per day of goods to the United States. S. Gulf Coast.
Cenovus is also part owner of two U. S. refineries. S.
Franklin said the company has reduced its exposure to production differences by about 50 to 55.
About Suncor Energy
Spokeswoman Irene Reese said in an email that asphalt production in the United States is completely unaffected by the differences.
\"The other 20 percent will only be potentially affected by the work of our marketing team, our important midstream capabilities and the huge logistics network we can leverage and the purpose of operations,\" she said.
Husky Energy
Spokesman Mel Duval said his company has more refining capacity than its own production and is not negatively affected by the WCS/WTI differences.
In order to get through the refinery, the company bought the competitor\'s oil at a discount. But the WCS-
Martin King, research director at GMP first energy agency, said the WTI difference is only part of the impact on Canadian oil producers.
\"All crude oil is on sale,\" Kim said . \" He pointed out that even Canadian light oil, which is usually at a higher price, is traded for $30 --per-
Bucket discount because \"they have to share the same pipe.
Michael Dunn, first energy analyst at GMP, said if you add all this up, 3.
Western Canada has a discount of at least $30 per day for 5 million barrels of oil production, which means producers lose about $100 million a day in revenue.
Small producers of heavy oil that do not have refining assets have been trying to hedge their production to ensure they do not face serious discounts.
Penglong energy company
Produce 23,000 barrels of diluted asphalt per day, but have a fixed hedge fund that locks in a discount of 17,000 barrels for $16.
Spokesman Tom MacMillan said.
Peng Long is trying to add more hedge funds and have futures contracts, he added.
Macmillan said that the company is currently producing only 400 barrels a day, facing a huge difference.
Tudor, piclin, and Holt\'s Murphy expect Canadian companies to continue their efforts to secure substantial discounts until the oil sands plant begins its maintenance season in 2019.
\"At that time, you will relieve the pressure on the system,\" he said . \".
The Canadian oil company is scrambling to find a place to store or ship their \"buckets of trouble\", a record --setting US$50-
Discount per barrel, which accounts for a large proportion of their production. Calgary-
S. -based heavy oil producers have been trying to hedge, looking for more rail vehicles or storage space.
The main export system is blocked by some companies that bid for more space than the system can hold. Last week, the benchmark price of heavy oil in Western Canada compared with the median price in western Texas, $50 a barrel.
The main line of Enbridge is moving.
Canadian crude oil production is 8 million barrels per day in the summer, but this does not necessarily mean that the daily production of these crude oil will hit a record.
Set discounts.
Some of them are turning to a firm commitment contract to bring prices closer to the U. S. benchmark.
\"The barrels moving on the main line of Enbridge are actually spot barrels.
This is the difference between $40 and $50 a barrel, \"Tudor Pickering Holt and Co.
Analyst Matt Murphy said.
Rory Johnston, commodity economist at Scotiabank, said, \"there is a tiered discount for the entire chain,\" but he said he was not sure how many barrels would be affected by a massive discount.
The price confusion has led to an increase in the amount of oil transported by rail, and Johnston said that by the end of this year, the amount of oil transported by rail will rise from the current 200,000 barrels/day to 300,000 barrels/day.
The current high volatility in WCS pricing is laying the groundwork for another difficult month in November.
The WCS is trading at $46.
75 barrels on Monday.
\"At the end of next week, Enbridge said, \'This is everyone\'s share in the spot market, \'and all the outstanding things are in trouble,\" Vice President Kevin Byrne said.
President, North American crude oil market, IHS Markit.
\"Every month, as the number of bad barrels increases, the value of these bad barrels decreases, and buyers of these barrels know it, so every month they can exercise more power on it, birn said, under the current differences, oilby-
Trucks can be an economic option for some companies.
This led to Calgary-
US-based oil producersS.
The refinery and Enbridge changed the way pipeline companies operated their main pipeline systems in 2020, possibly moving from nomination procedures to long-running systemsterm contracts.
Many of these customers are angry at Enbridge as it tries to change the nomination process earlier this year to increase oil shipments in the short term
Real-time policy changes that caused the WCS market to wave for many consecutive days at the beginning of 5.
Tracie Kenyon, an Enbridge spokesman, said the company would not comment on private business discussions with customers.
Meanwhile, Calgary-
Oil producers are snapping up more rail capacity or trying to hedge at higher prices.
\"We are reducing exposure to wider light --
Cenovus Energy Inc. brings our products to the market by adopting a combination approach, which is very different.
Spokesperson Sonia Franklin said in an email.
At the end of September, Cenovus signed an agreement with two major Canadian rail companies to ship 100,000 barrels per day of goods to the United States. S. Gulf Coast.
Cenovus is also part owner of two U. S. refineries. S.
Franklin said the company has reduced its exposure to production differences by about 50 to 55.
About Suncor Energy
Spokeswoman Irene Reese said in an email that asphalt production in the United States is completely unaffected by the differences.
\"The other 20 percent will only be potentially affected by the work of our marketing team, our important midstream capabilities and the huge logistics network we can leverage and the purpose of operations,\" she said.
Husky Energy
Spokesman Mel Duval said his company has more refining capacity than its own production and is not negatively affected by the WCS/WTI differences.
In order to get through the refinery, the company bought the competitor\'s oil at a discount. But the WCS-
Martin King, research director at GMP first energy agency, said the WTI difference is only part of the impact on Canadian oil producers.
\"All crude oil is on sale,\" Kim said . \" He pointed out that even Canadian light oil, which is usually at a higher price, is traded for $30 --per-
Bucket discount because \"they have to share the same pipe.
Michael Dunn, first energy analyst at GMP, said if you add all this up, 3.
Western Canada has a discount of at least $30 per day for 5 million barrels of oil production, which means producers lose about $100 million a day in revenue.
Small producers of heavy oil that do not have refining assets have been trying to hedge their production to ensure they do not face serious discounts.
Penglong energy company
Produce 23,000 barrels of diluted asphalt per day, but have a fixed hedge fund that locks in a discount of 17,000 barrels for $16.
Spokesman Tom MacMillan said.
Peng Long is trying to add more hedge funds and have futures contracts, he added.
Macmillan said that the company is currently producing only 400 barrels a day, facing a huge difference.
Tudor, piclin, and Holt\'s Murphy expect Canadian companies to continue their efforts to secure substantial discounts until the oil sands plant begins its maintenance season in 2019.
\"At that time, you will relieve the pressure on the system,\" he said . \".
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