Page 10 - NorthAmOil Week 45

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Repsol looks to Canadian oil
CANADA
SPAIN’S Repsol is reportedly looking at Cana- dian heavy crude as a source of feedstock for its European refineries. This comes amid shortages of supply from other traditional producers of heavy crude such as Venezuela and Mexico.
Citing sources familiar with the matter this week, Bloomberg reported that Repsol was con- sidering transporting 500,000 barrels per month of heavy crude from Alberta by rail to Montreal, where the oil would be loaded onto tankers for shipment to Europe. The news service reported that Repsol had also considered transporting the crude across the US border to New Jersey and shipping it to Europe from there.
Shipments of heavy crude from Canada’s oil sands are rare, given the distance between Alberta and ports in both the US and Canada, as well as the landlocked province’s takeaway capacity constraints. But a changing global heavy crude supply picture stands to offer a boost to Alberta’s beleaguered oil sands industry. Indeed, Repsol occasionally receives Canadian oil via ports on the US Gulf Coast, though any ship- ments from there have to compete with crude produced in the US for space on pipelines and tankers.
Repsol is not the only one to receive Canadian oil, despite the infrequent nature of shipments. About 400,000 barrels of Alberta crude were sent to the UK last year, according to Bloomberg, marking the first significant shipment to Europe since 2014.
Historically, Repsol has tended to source its heavy crude from Latin America – predomi- nantly from Mexico and Venezuela. However, production in both countries has been falling. In Mexico, it declined for its 14th straight year to
1.83mn barrels per day (bpd) in 2018. In Vene- zuela, meanwhile, ongoing civil unrest was exac- erbated by US sanctions this year, and output has fallen from above 2mn bpd in 2015 to less than 700,000 bpd today.
Repsol also produces conventional heavy crude at its Chauvin field in west-central Alberta. Reports that Repsol may seek to carry Cana- dian oil by rail will be welcomed by oil sands producers, coming in the same month that the Alberta government said it would ease output restrictions on producers that move more of
their oil via rail.
However, an expected announcement by
the Alberta government to confirm the sale of provincial crude-by-rail contracts to the private sector has not yet materialised. Alberta Energy Minister Sonya Savage had previously said a deal would be announced in October.
A sense of urgency over the sale of the con- tracts was heightened by a recent outage on the Keystone pipeline, which carries crude from Alberta’s oil sands to the US. The pipeline was reported to have been restarted this week at 20% pressure reduction, but the outage temporarily created more favourable economics for crude- by-rail shipments.
Indeed, Imperial Oil has been one of the producers to respond by ramping up crude- by-rail shipments in the short term, though the company has not specified how big the increase would be. But Imperial’s CEO, Rich Kruger, said his company was not among those seeking to take over Alberta’s crude-by-rail contracts. Kruger did say, however, that Imperial might be interested in allowing other companies that take over the rail leases to access its terminal.™
Repsol is reportedly considering carrying Alberta crude by rail
to Montreal, where it would be loaded onto tankers for shipment to Europe.
A changing global heavy crude supply picture stands to offer a boost to Alberta’s beleaguered oil sands industry.
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w w w . N E W S B A S E . c o m Week 45
13•November•2019