Friday, May 7, 2010

Sinking price of Canadian oilsands crude threatens bitumen production, pipeline

The cost of oil from Alberta’s tar sands is trading near the cheapest relative to the New York benchmark in 17 months as refineries in the Midwest shut for maintenance and pipeline costs escalate.
Western Canada Select traded at a discount of $14.65 to West Texas Intermediate on April 30, near the $18 gap on April 15 that was the widest since November 2008.
Enbridge Inc. has won approval for a 33 percent tariff increase to move oil via its pipeline to the Midwest, where the U.S. Energy Department said more than twice as much refinery capacity than usual is offline for maintenance.
The higher tolls will hurt Suncor Energy Inc. and Alberta’s oil sands producers, which will be forced to offer discounts to the refiners to remain competitive with oil available from the U.S. Gulf Coast.

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