Two of Canada’s biggest oil and gas producers reported a rise in production as strong demand for cheaper Canadian oil helped cushion the impact of transport bottlenecks plaguing the industry.
Demand for heavy Canadian crude from U.S. Gulf of Mexico refiners has been rising due to a drop in production in Venezuela in the wake of a crisis at its state-run oil firm.
Calgary, Alberta-based Cenovus Energy reported a 61 per cent rise in total production 518,530 barrels of oil equivalent per day, while second-largest oil producer Suncor Energy’s output rose 22.7 per cent to 661,700 boe/d.
An outage forced Suncor to cut its output guidance for the year.
The surge in Canadian production has led to pipeline constraints, resulting in Canadian heavy crude trading at steep discounts to U.S. light crude and pushing producers to turn to railroads.
Canadian oil sands production will rise more than half a million barrels per day in 2019, according to data firm IHS Markit.
Cenovus said it is beginning to see increased activity across its rail loading facilities as pipelines operate at full capacity.
The company posted a net loss of $410 million, or 33 cents per share, in the second quarter, compared with a profit of $2.56 billion, or $2.30 per share, a year earlier due to a fall in its cash flow.
Husky Energy, however, reported a 7.5 per cent drop in total production as the company increased focus on its refining business to take advantage of widening heavy crude price differentials.
“The physical integration of our upstream and downstream businesses, including our committed pipeline capacity, shielded us from location and quality differentials,” Husky Chief Executive Officer Rob Peabody told Reuters.
Husky posted a quarterly profit of $448 million compared to a loss of $93 million in the year-ago quarter.
(Reuters)
