Cenovus Energy Inc. is the first Canadian oilsands company to announce it’s shipping crude via the Panama Canal to Irving Oil Ltd.’s refinery in Saint John, New Brunswick, as the industry explores circuitous routes to reach new markets.
The Calgary-based oilsands producer announced July 1 it had loaded a batch of crude at the Trans Mountain terminal in Burnaby, B.C. on the Cabo de Hornos tanker, which has embarked on an 11,900-kilometre journey to Canada’s East Coast via the Panama Canal.
Cenovus shared a photo of the tanker at the Burnaby terminal on Twitter and announced it had sold its first crude oil shipment to Irving Oil on Canada Day.
“We were pleased with the economics of this transaction for Cenovus and excited to work with another strong Canadian company like Irving Oil,” Cenovus executive vice-president, downstream, Keith Chiasson said in an email.
“It’s encouraging to see more Canadian-produced oil refined at a Canadian refinery. It’s a one-off shipment for now, but we believe this Canadian success story has the potential over time to create significant value for both companies and the entire country,” Chiasson said.
The Cenovus shipment was part of Irving’s effort to pursue opportunities that expand the market for the country’s natural resources and provides energy security to customers, Irving spokesperson Candice MacLean said in an email.
Irving was a backer of the cancelled $15-billion Energy East pipeline project, which Calgary-based TC Energy Corp. had proposed to connect Alberta’s oil to ports in Quebec and ultimately to the Saint John refinery and port on the Atlantic Ocean. The project was cancelled in 2017 after sustained opposition by environment and local groups, apart from the governments of Ontario and Quebec. Irving had committed to co-invest in an expanded port facility connected to its refinery if the project had proceeded.
In May, Transport Canada approved Irving’s application to use foreign ships to source Canadian oil shipments for its refinery in New Brunswick, a move which surprised many analysts in the oil industry as it suggested the circuitous route through the Panama Canal was economically feasible.
Irving plans to source Canadian oil from the Burnaby terminal along the U.S. Gulf Coast. The Trans Mountain Expansion, ending in British Columbia, and Keystone XL pipeline, weaving its way to the Gulf Coast, are both under construction and — once built — could dramatically boost Alberta’s oil shipments to eastern Canada.
On May 28, Irving said it would purchase the only refinery in Newfoundland and Labrador at Come By Chance and called the transaction a “building block” in a larger strategy to source and process more Canadian oil.
“Our recently announced plans to source Canadian crude oil and today’s announcement in Newfoundland are two building blocks that fit together with our company’s existing strengths,” Irving spokesperson Candice MacLean said in an email when the refinery deal was announced. “All of these elements contribute to our long-time objective of helping Canada be even more competitive in the international landscape.”