Operations coordinator Doug Rotzien works at the Enbridge Pipelines oil terminal facility in Hardisty, Alta., June 20, 2007. Alberta's oil pipeline hub, where millions of barrels of crude flow each day to pipelines that feed markets in Canada and the United States is a beehive of activity. But with rising expenses for labour, electricity, transportation and rig costs, oil producers are finding that the profit margins on US$70-per barrel oil aren't that much different than when crude was $40 a barrel.Larry MacDougal
Devon Energy Corp. has closed the taps on 10,000 barrels of oil production a day, as Canadian crude backs up behind jammed capacity in pipelines belonging to Enbridge Inc.
The company expects the curtailments "to continue through year-end, reducing the company's expected fourth quarter Canadian oil volumes by roughly 300,000 barrels."
That's equivalent to 0.5 per cent of Devon's total production, although it is a larger percentage of its Canadian output.
Devon is the latest in a string of companies to announce problems stemming from throughput cutbacks on the Enbridge system, which are the result of a series of disruptions the pipeline company has experienced in recent months.
In recent days, representatives from Suncor Energy Inc. and Canadian Oil Sands Trust, which owns a 37 per cent stake in Syncrude Canada Ltd., have acknowledged interruptions of their ability to ship crude, although both said losses was not material. Syncrude said its production of oil has not been affected.
Enbridge has "apportioned" capacity on much of its crude network, which means it has restricted how much companies can ship on its pipe. The company has said it can't transport 26 per cent of demand on several of its most important pipes.
The apportionment is a result of an electrical problem that hampered one of its pipes in late November, and increased demand following two pipe ruptures this summer, which caused major outages that continue to reverberate through its system.
The problems in bringing supply to market have led to a backup of crude in Canada, sending the price of Canadian oil sharply lower so far this month.
Nathan VanderKlippe