CALGARY — A regulator’s lifting of pressure restrictions on the Keystone oil pipeline in the United States earlier this week is expected to help reduce discounts being paid for Western Canadian heavy crude.
Matthew John, spokesman for Calgary-based pipeline owner TransCanada Corp., says the order was limited to a small part of the pipeline following a leak in November in South Dakota and therefore the company doesn’t expect big increases in volume.
He says he can’t be specific because the numbers are commercially sensitive.
Still, analyst Nick Lupick of AltaCorp Capital says the decision will help reduce a glut of oil that has overwhelmed pipeline access to export markets and contributed to wider differences between bitumen-blend Western Canadian Select and West Texas Intermediate.
Lupick says a bigger influence on the recent narrowing of the WCS-WTI differential to about US$17 from highs of about US$30 per barrel in the first quarter has been a series of maintenance shutdowns at oilsands producing facilities which have reduced production.
The lower prices led to Canadian Natural Resources Ltd. and Cenovus Energy Inc. producing less heavy oil in the first quarter, while Husky Energy Inc. started buying heavy oil for use in its refineries because it was less expensive than producing its own oil.
Companies in this story: (TSX:TRP, TSX:CNQ, TSX:CVE, TSX:HSE)