Cenovus has strategies to cope with oil price-CEO

Thu Jan 24, 2013 1:52pm EST
 
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* Initiatives take care of 90 pct of price exposure

* Marketing arrangements, hedging mitigate discounts

* U.S. refinery to be "debottlenecked"

CALGARY, Alberta, Jan 24 (Reuters) - Cenovus Energy Inc has refining capacity, supply arrangements and hedging contracts in place to deal with 90 percent of its exposure to deeply discounted Canadian heavy crude oil prices this year, its chief executive said on Thursday.

Cenovus, known for its Foster Creek and Christina Lake steam-driven oil sands projects in Northern Alberta, has a 50-50 joint venture with Phillips 66 that involves ownership in the Wood River refinery in Illinois and Borger plant in Texas. The companies recently completed a major project to boost capacity to process heavy crude at Wood River.

The arrangement has allowed Cenovus to withstand the wide price differentials on Canadian heavy crude that are pressuring bottom lines across the industry, CEO Brian Ferguson said.

However, Ferguson stressed the company has other marketing and risk-management initiatives as oil sands production increases with future oil sands project phases.

"We do start to get a little bit long in heavy oil as we bring on the next phase of Christina Lake in the third quarter of this year," Ferguson told investors at a conference in Whistler, British Columbia. "There are ways also to achieve economic integration -- not just coking capacity."

Coking is a process in refining that breaks down the heavy components in the crude so it can be turned into gasoline and other petroleum products.   Continued...