By Nia Williams
CALGARY, Alberta, April 27 (Reuters) - Cenovus Energy
CVE.TO is looking into building a diluent recovery unit at its
Bruderheim crude-by-rail terminal near Edmonton, Alberta, which
would allow the company to ship raw bitumen in tank cars and
save on condensate costs.
Speaking to reporters after Cenovus's annual general meeting
in Calgary on Wednesday, chief executive Brian Ferguson said
stripping out condensate could improve margins by $2-$4 a
barrel, depending on market conditions.
Although Canadian crude-by-rail volumes slipped in 2015,
rail is still seen as a necessity for many landlocked oil sands
producers given growing production and a lack of progress on
export pipeline proposals like TransCanada Corp's TRP.TO
Keystone XL and Enbridge Inc's ENB.TO Northern Gateway.
"This would allow us to tiptoe into the midstream part of
the business," Ferguson said. "Anything we can do along the
value chain to change or improve the product, or change or
improve the market is a good thing."
Raw bitumen from Alberta's oil sands is the consistency of
asphalt at room temperature and each barrel needs to be diluted
with one third condensate, which typically trades at a premium
to crude, in order to flow through pipelines.
A diluent recovery unit at Bruderheim would remove the
blended condensate from each barrel before they are loaded onto
rail cars, increasing the volume of bitumen that can be shipped
and keeping the condensate in Alberta to be reused.
Earlier on Wednesday Cenovus reported a first quarter loss
and said bitumen realizations from its oil sands projects took a
hit from high condensate prices.
Ferguson said nothing had been budgeted yet, and building a
diluent recovery unit would take two or three years and require
permits. However, he also said if Cenovus does go ahead with the
plan it may fit in with the Federal government's aim of
encouraging innovation and be eligible for incentives.
(Editing by Andrew Hay)