As Canadian crude oil struggles with crippling rail bottlenecks, it is of minor comfort that Canada's Imperial Oil has managed to re-start shipments from Alberta of a modest and undisclosed amount of crude this week.
Yet, in a situation in which Canadian crude shipments by rail have halved since their record of just over 350,000 bpd in December, Imperial's resumption of shipping at all is a hopeful sign.
In an email to Reuters, a spokesperson for Imperial said the company had resumed "a small amount of shipments that are economic under current conditions".
Alberta's crude glut led to a provincial government move in January to implement mandatory production cuts. Since then, the cost of shipping crude by rail has become uneconomical. Shipments of crude by rail have all but ended, and pipelines are at or near capacity.
For March, total volumes of crude-by-rail shipments were in the rage of 160,000-175,000 bpd, according to analysts at TPH Energy Research cited by Reuters.
The overall data seems to show that rail shipments are slowly increasing, with Imperial appearing to provide further evidence.
But it's far from an end to Alberta's oil glut, particularly when Imperial is not releasing any actual numbers of what they've finally managed to ship economically.
For Imperial, the provincial government's mandatory removal of 325,000 bpd from the market is cause for concern. Imperial is an integrated oil company, and this will affect profitability in its downstream segment.
It also has meant that because of the gaping spread between Canadian crude and WTI, feedstock for Imperial's refining operations is too expensive. In other words, there's no margin in the end product.
Imperial has three key assets in Alberta and is focused solely on oil sands, with the capacity to produce around 400,000 bpd, and plans to grow production by some 15 percent over the next couple of years, assuming government cuts and an ongoing rail bottleneck do not stand in the way too much longer.
By Damir Kaletovic for Oilprice.com
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