Canada’s oil-sands producers are gradually ramping up output as refiners increased their demand from the low in the past months when businesses were forced to shut due to the coronavirus pandemic. Husky Energy and Cenovus Energy have reportedly restored about 20% of the production that was reduced earlier in the year.
However, with a WTI price of around $40/barrel, margins are still squeezed, analysts said. Some other producers are still shutting down production for maintenance. Albian mine and the Scotford upgrader, which are owned by Canadian Natural Resources, are expected to remain under maintenance through August. Meanwhile, Husky Energy plans to conduct maintenance at its Lloydminster upgraders in September.
An industry survey showed that lower production during the maintenance contributed to the withdrawal in Western Canadian oil inventories, which fell to as low as 28.6 million barrels at the end of June. The shutdowns also create a spare room in Canada’s typically congested pipelines. Enbridge on Monday said nominations for heavy oil shipments on its Mainline exceeded capacity by 3% in July and 7% in August, compared to 40% or higher before the pandemic.
