Cenovus Energy is blaming pipeline constraints and discounted heavy oil pricing for running some of its oilsands facilities at reduced production rates.
In its first-quarter operational update Thursday, the Calgary-based company says they’ve been operating its Christina Lake site, located southeast of Fort McMurray, and Foster Creek facilities at reduced production levels since February.
“When Canadian heavy oil is selling at a wide discount to West Texas Intermediate due to transportation bottlenecks, we have significant capacity to store barrels in our oil sands reservoirs to be produced and sold at a later date when pipeline capacity improves and differentials narrow,” said Alex Pourbaix, Cenovus President & Chief Executive Officer, in a release.
Pourbaix says the slow pace of the ramp-up in crude-by-rail export capacity in Alberta is another reason they’re cutting production rates.
“These transportation challenges faced by our industry clearly demonstrate the urgent need for approved pipeline projects in Canada to proceed as soon as possible.”
Cenovus anticipates first-quarter oilsands production of between 350, 000 and 360, 000 barrels per day, but are still expecting to reach full-year volumes.