Under construction as producers boosted output
Canadian heavy crude fell to near $40 a barrel, threatening projects under construction as producers boosted output and space on a pipeline was rationed.
Imperial Oil Ltd. (IMO) is increasing output at its Kearl oil sands project to 110,000 barrels a day after a shutdown last month, Pius Rolheiser, a Calgary-based spokesman, said by phone yesterday. Enbridge Inc. apportioned space on the Spearhead pipeline, which carries Canadian crude south to Cushing, Oklahoma, after demand to ship on the line exceeded capacity, according to a company statement.
Heavy West Canadian Select rose 82 cents to $43.01 a barrel after falling to $42.19 a barrel yesterday, the lowest since April 2009, data compiled by Bloomberg showed. Crude has fallen into a bear market as U.S. output surges to the highest in more than three decades. Calgary-based Cenovus Energy Inc. (CVE) said today it “substantially” slowed development plans at the Narrows Lake oil sands project. Canadian Natural Resources Ltd. has said it may scale back investment plans if oil prices remain near current levels.
“Any production that’s currently under construction is at risk, absolutely,” Dinara Millington, the vice president of research at Canadian Energy Research Institute in Calgary, said by phone. “Any production that’s currently existing can produce at $40 to $50.”
West Texas Intermediate futures fell 99 cents to $59.95 a barrel on the New York Mercantile Exchange, the lowest settlement since July 2009.