CALGARY, Alberta, Oct 30 (Reuters) – Suncor Energy Inc will look regularly at the economics of shipping Western Canadian crude from the country’s East Coast to markets overseas, Chief Executive Officer Steve Williams said on Thursday.
In a third-quarter conference call, Williams said shipping Cold Lake-grade crude by rail from Alberta to the East Coast and from there transporting it overseas could be a long-term opportunity for the company, with Europe and the U.S. East and Gulf Coasts as possible markets.
For years oil producers in landlocked Alberta have been seeking ways to get their crude to tidewater and higher-priced international markets.
Last month Suncor sent its first ever tanker of Western Canadian crude from Canada’s East Coast to Europe and earlier this month it also sent a tanker to the U.S. Gulf Coast.
In both instances the crude was shipped across the country by rail to the port of Sorel-Tracy, Quebec, on the St. Lawrence River, where it was loaded onto tankers.
A source at Suncor said the deals were made several months ago, when the economics of transporting crude to markets via rail and tanker made more sense.
Since then price differentials between Western Canadian crude and international benchmark grades have narrowed, making the economics of the journey less attractive.
Williams declined to say whether any more vessels were scheduled to be loaded, but said future shipments would depend on whether the economics were favorable.
“Depending on the market, it is a logistics route that is part of our flexible midstream. It’s a purely economic activity, so we’ll look at the price differentials and see whether it makes good business sense,” he said.
“It could be movements around the coast of this continent, either to refineries on the East Coast or down to the Gulf. Europe currently has an issue in terms of crude supply, so there may be opportunities to move into Europe as well.”
Williams declined to say whether Suncor planned to use TransCanada Corp’s proposed Energy East pipeline to Canada’s East Coast to ship crude offshore.
Suncor reported a fall in third-quarter profits after the market close on Wednesday as a result of lower production and weaker commodity prices.
However, analysts said the company’s performance in its downstream sector was strong and that it had reduced costs in its oil sands business.
Suncor shares were last up 29 cents at C$39.14 on the Toronto Stock Exchange.
($1=$1.12 Canadian) (Editing by Chizu Nomiyama; and Peter Galloway)
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