Canada's Cenovus opening crude marketing desk in Houston

Wed Sep 30, 2015 4:52pm EDT
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By Catherine Ngai and Nia Williams

CALGARY, Alberta, Sept 30 (Reuters) - Oil sands producer Cenovus Energy is setting up its first marketing desk outside Canada in Houston, Texas, to sell more of its heavy crude to refineries in the Gulf Coast region, the company said on Wednesday.

The move comes as the Calgary, Alberta-based company prepares to cut 540 jobs over the next few weeks, in addition to 800 positions eliminated earlier this year, as low global crude prices continue to hurt oil and gas producers. It had 3,545 employees as of the end of last year.

Cenovus slashed its quarterly dividend by 40 percent in July after net income and operating profits fell in the second quarter.

Despite weak prices, Cenovus' crude production, currently around 200,000 barrels per day, is expected to grow by about 25 percent in the next 18 months as new phases of its Foster Creek and Christina Lake oil sands projects come online, spokesman Brett Harris said.

The U.S. Gulf Coast is North America's largest refining complex and Harris said the new Houston office will be an important part of the company's strategy to improve market access for its crude.

"We are already selling into that market but there's excess heavy oil (refining) capacity down there and a tidewater port," Harris said. "It's pretty important for Canada now, and for growth."

Cenovus ships crude to the Gulf Coast on the Flanagan South and Seaway pipelines, and also owns a rail terminal in Alberta that can be used to transport crude south when Canadian crude differentials are wide enough to cover the cost.

Harris said Cenovus will have five staff in the new Houston office, and one position has already been filled.

The Houston desk will market all production from Cenovus' oil sands projects, which are joint ventures with Conoco Phillips.

(Editing by Stephen R. Trousdale)