Suncor crude tanker to resume journey from Quebec to Gulf Coast
A tanker chartered by Canada’s Suncor Energy Inc to ship oil sands crude from Quebec to the U.S. Gulf Coast was expected to receive replacement parts on Friday, enabling it to resume its journey, a Transport Canada spokeswoman said.
The aframax tanker Genmar Daphne will be the second tanker of Western Canadian heavy crude that Suncor has shipped from the port of Sorel-Tracy on Quebec’s St. Lawrence river.
However, further shipments are unlikely in the current price environment, a market source said.
Shrinking differentials between Western Canada Select heavy blend and U.S. crude futures mean netbacks - the price received by producers minus the cost of getting the product to market - have been severely squeezed.
The Genmar Daphne has been anchored in the St. Lawrence river for several days after the ship’s crew reported the failure of an emergency fire pump to Transport Canada.
“Once the repairs have been made and the Genmar Daphne meets the regulatory requirements, the vessel will be authorized to resume its journey,” said Transport Canada spokeswoman Josianne Martel.
From Sorel-Tracy the Genmar Daphne is scheduled to deliver its cargo to the U.S. Gulf Coast, according to Reuters shipping data. The Gulf Coast, where Western Canada Select (WCS) heavy blend competes with Maya, a Mexican blend of similar quality, is North America’s largest refining centre.
It is a costly journey given shipping crude by rail from Alberta to Quebec costs roughly $11-$12 per barrel, and shipping from East Coast Canada to the Gulf Coast on a tanker is about $2 per barrel. The same journey costs around $8 by pipeline.
Since the beginning of October WCS differentials have traded around $13 per barrel below U.S. crude futures. The market source said the deal was set up several months ago when the economics made more sense.
“It is not economic for us to move cargoes off the east coast right now,” he said.
Suncor has been shipping western Canadian heavy crude by rail to Sorel-Tracy since July and in September, the company shipped a tanker of Western Canadian heavy crude to Italy, its first ever such shipment to Europe.
Suncor will continue to move crude by rail to its 137,000 barrel-per-day refinery in Montreal, Quebec, which is undergoing 11 weeks of planned maintenance that started on Sept. 22.
Spokesman Michael Lawrence declined to comment specifically on the Genmar Daphne but said shipping provided the company with “operational flexibility.”
“Suncor considers shipping as a complement to transporting crude by pipeline or rail, and it’s something we will take advantage of on an opportunistic basis,” Lawrence said.
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