Photo by THE ASSOCIATED PRESS An oil refinery flare, right, continues to burn through wind and rain as Hurricane Harvey moves into Corpus Christi, Texas.

Canadian-owned refineries expected to register higher profits amid Gulf Coast disruption

CALGARY — Canadian-owned refineries are expected to register higher profits as more U.S. Gulf Coast facilities are shut down due to ongoing extensive flooding from what’s left of Hurricane Harvey.

And some analysts say refinery outages in Texas that have already sparked higher gasoline prices in the United States and Canada will likely continue to affect North American fuel markets for months.

“Gasoline prices moving higher, it does help all of the refiners,” said Randy Ollenberger, managing director of oil and gas equity research for BMO Capital Markets in Calgary.

“Cenovus and Husky, because they have Midwest refining assets — as does Suncor in Denver — they’ll probably see more of the strength in product prices than we’ll see in Ontario or Alberta (refineries).”

According to a report from AltaCorp Capital in Calgary, mid-continent refining profit margins have jumped by about 20 per cent this week, a development it said will boost the bottom lines of Calgary-based Husky (TSX:HSE) and Cenovus (TSX:CVE).

Husky owns one refinery and partners with BP in another in Ohio, while Cenovus owns a 50 per cent stake in Phillips 66 refineries in Illinois and northern Texas. All are well removed from Harvey’s path.

AltaCorp analyst Nick Lupick said Canadian refinery product pricing is up slightly “but nothing compared to what we have seen in the U.S.”

Ollenberger said the situation is more complicated for Canadian oil producers. The storm is preventing ocean tankers from delivering competing loads of imported foreign crudes in Houston but it is also interfering with some of the 400,000 barrels of Canadian crude normally delivered daily to the Gulf Coast, about 11 per cent of Canada’s total oil exports.

That could translate into more oil going into storage in the U.S. Midwest, which could mean temporarily lower prices.

On Wednesday, Calgary-based Encana (TSX:ECA) reported it has restarted production and drilling at its Eagle Ford oil fields in southern Texas. It shut them down last Friday as a precautionary measure.

“Our Eagle Ford assets did not incur any damage. We were well prepared for the hurricane and successfully limited any impacts to four days between Friday and Monday,” said spokesman Jay Averill.

Research director Jackie Forrest of ARC Financial in Calgary said she expects Harvey’s effect on the gasoline market could match that of Katrina 12 years ago and result in higher fuel prices in the U.S. and Canada that last well into November.

“Katrina did cause prices across the continent to increase, not just in the Gulf Coast … Those elevated gasoline prices did stick around for almost three months until those refineries were back on line,” she said.

IHS Markit says about 30 per cent of U.S. Gulf of Mexico refinery output is expected to be idled as the storm makes its way eastward toward the Port Arthur/Lake Charles refining hub on the Texas-Louisiana border.

Just Posted

Four people arrested after gas and dash

Four people were arrested after an alleged gas and dash in two… Continue reading

Arrests made at Red Deer Rebels game

Charges pending against two people

Nebraska approves TransCanada’s Keystone XL pipeline in close vote

CALGARY — Nebraska’s Public Service Commission has approved TransCanada’s Keystone XL route… Continue reading

Canadians told to brace for a ‘classic’ Canadian winter with lots of snow

TORONTO — One of Canada’s high profile weather forecasters is warning Canadians… Continue reading

VIDEO: Replay Red Deer: Nov. 19

Watch news highlights from the week of Nov. 13

CP Holiday train to stop in Ponoka for another year

The popular train will feature entertainment from Colin James and Emma-Lee

Kittens rescued after allegedly being tossed from vehicle

Couple finds abandoned kittens new home through Facebook

VIDEO: ‘Party bus’ goes up in flames in Vancouver

Fire crews responded to the late night blaze

Chicken crosses B.C. road, stops traffic

Rooster makes early morning commuters wait in Maple Ridge

Red Deerian honours her brother who died in a motorcycle collision

Houaida Haddad is encouraging Red Deer residents to donate blood

Red Deer County firefighters to be recognized for Waterton help

RCMP brass will give formal recognition Monday

Ron James tries to lighten humanity’s load through humour

The comedian returns to Red Deer for shows Dec. 1 and 2

100+ Women Red Deer donate to Christmas Bureau

About $14,000 will help with Christmas hampers and toys

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month