March 22, 2018 / 10:21 AM / a month ago

Cenovus Energy says transportation bottlenecks hit production

(Reuters) - Canada’s Cenovus Energy Inc (CVE.TO) said on Thursday it was running oil sands production below capacity and stockpiling excess oil due to trouble with exporting through maxed-out pipelines to the United States.

FILE PHOTO - A warning sign is pictured near wellheads that inject steam into the ground and pump oil out at the Cenovus Energy Christina Lake Steam-Assisted Gravity Drainage (SAGD) project 120 km (74 miles) south of Fort McMurray, Alberta, August 15, 2013. REUTERS/Todd Korol

The company forecast first-quarter production to double from a year earlier, but blamed transportation bottlenecks for reduced prices of its crude, compared to U.S. alternatives.

Canadian heavy oil discount has widened against the West Texas Intermediate (WTI) benchmark recently as growing inventories have led to a supply buildup.

“We’re taking steps to respond to a critical shortage of export pipeline capacity in Western Canada that is beyond our control and is having a negative impact on our industry and the broader Canadian economy,” Chief Executive Alex Pourbaix said.

The Calgary-based company said it expected to produce 350,000 to 360,000 barrels per day (bbl/d) this year, compared with 181,501 bbl/d a year earlier.

Cenovus maintained its full year production of 364,000 to 382,000 bbl/d.

    Reporting by Anirban Paul in Bengaluru; Editing by Anil D'Silva

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