Canada Heavy Oil Falls as Wood River Refinery Shuts Crude Unit
Western Canada Select heavy oil weakened to its lowest level in a month after the second-largest Midwest refinery shut down a unit over the weekend, cutting into demand.
Phillips 66 (PSX) shut a crude unit at its 356,000-barrel-a-day refinery in Wood River, Illinois, after an electrical fire Jan. 12. BP Plc’s Whiting plant in Indiana is the largest in the region at 420,000 barrels a day.
The unit will be back in service within “a couple of days,” according to a company statement.
Western Canada Select, an oil-sands bitumen blend, fell $1.50 to a $41.75-a-barrel discount to U.S. benchmark West Texas Intermediate, according to Net Energy Inc., a Calgary oil broker.
The Wood River refinery is a joint venture between Phillips 66 and Cenovus Energy Inc. (CVE), and takes crude from two Cenovus oil-sands projects that produced 95,625 barrels a day during the third quarter.
Rising crude oil production in Alberta has filled up export pipelines, causing steepening discounts as some supplies can’t reach the U.S. refining markets. Last week, capacity to ship on two Enbridge Inc. export pipelines carrying as much as 1.25 million barrels a day was cut by 10 percent this month because of power outages and equipment failures.
Canada exported 2.3 million barrels of oil a day during the third quarter of 2012, up 4.5 percent from the same period a year earlier, according to the National Energy Board.
Extra production from a new heavy oil project, Imperial Oil Ltd. (IMO)’s 110,000-barrel-a-day Kearl mine in Alberta, is expected to cone online early this year, adding to supply that will have to travel through limited pipeline space.
Syncrude, a synthetic light crude produced from bitumen, rose 55 cents to trade at parity with WTI.
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