March 12, 2019 / 3:08 PM / a year ago

Canadian crude exports by rail uneconomic amid output cuts: Suncor executive

FILE PHOTO: A Suncor refinery is seen in Sherwood Park, near Edmonton, Alberta, Canada, November 13, 2016. REUTERS/Chris Helgren/File Photo

HOUSTON (Reuters) - Canada’s mandated oil production cuts are preventing Suncor Energy Inc, one of Canada’s biggest oil producers, from sending its heavy crude to the U.S. Gulf Coast by rail, a company official said in an interview on Tuesday.

The Canadian oil producer is “interested in rail economics going forward,” but the rise in Canadian heavy crude prices since the December mandated production cuts have made rail shipments “difficult to justify,” said Steve Reynish, a Suncor executive vice president, at the CERAWeek conference.

Gulf Coast oil refiners have scrambled for heavy crude supplies after U.S. sanctions on Venezuela’s state-run PDVSA halted its exports of the grade to the United States.

Suncor sees the supply gap as “a great opportunity,” but Canada already ships “everything we possibly can, given the pipeline and rail constraints,” Reynish said.

The Alberta government should phase out the mandated output curtailment to “let the market react to signals we’re getting,” he said.

Reporting by Collin Eaton; Editing by Chizu Nomiyama and Marguerita Choy

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