Upheavals in the Canadian crude market are providing unique opportunities for fi...
CALGARY, Alberta/NEW YORK - Upheavals in the Canadian crude market are providing unique opportunities for firms with sizeable long-term leases on Alberta storage tanks, a cluster that sources say includes Mercuria Energy Group and oil major BP Plc’s trading arm.
The opportunity for traders comes from monthly pipeline “apportionment”, when demand to ship crude on certain pipelines exceeds capacity, forcing pipeline operators to ration the number of barrels each shipper can move. Even with the Alberta cuts, oil inventories in western Canada hit a record 37.1 million barrels in April and are close to 34 million barrels in May, according to energy information provider Genscape.
BP does not disclose its storage lease position in Canada but the company owns large refineries in the U.S. Midwest which run Canadian heavy crude. BP also declined to comment. A four-year deal in Canada costs about $1.50 a barrel a month compared to 30-40 cents per barrel in the U.S. Gulf Coast, other sources said. Monthly storage rates at the U.S. futures hub of Cushing, Oklahoma, are about 30 cents a barrel.
Gibson is the dominant storage owner in Hardisty, with 10 million barrels built and this year sanctioned another 2.5 million barrels. Its storage contracts are all long-term leases, averaging 10 years, and its main customers are large oil sands producers.
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