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Suncor halts 2016 petcoke shipments from Fort McMurray, Alberta

Oil and natural gas producer Suncor Energy has suspended for 2016 its marketing of petcoke produced at its refinery in Fort McMurray, Alberta, the company said Wednesday.

Calgary-based Suncor, which produces high sulfur petcoke, with HGI as low as 30, at the refinery, said its costs to move petcoke to market have gone too far above current pricing.

"Suncor will continue to evaluate these fundamentals and consider re-entering the market with this product at an appropriate time," the company said in a statement.

Suncor has a large inventory and unlimited storage capability near its Fort McMurray refinery. High transportation costs, believed to be at about $60/mt, combined with high sulfur petcoke prices in the low-$20s, made shipping costs prohibitive, the company said.

"Inventory of oil sands pet coke currently on hand ... will be sold in the coming weeks but movement of additional volume from Fort McMurray was halted in late November," Suncor said.

Ridley Terminals handled 90,161 mt of petcoke in November, a 41.2% increase from the same month in 2014, according to Prince Rupert Port Authority data released Friday. On a year-to-date basis, Ridley Terminals has seen a drop in petcoke volumes to 822,783 mt year-to-date, down 23.8% from the same period last year.

Suncor is believed to ship most if not all of the roughly 1 million mt of petcoke from its Fort McMurray and Edmonton refineries through Ridley, which is typically sold into the Japanese aluminum market.

The company exports between 250,000-300,000 mt of petcoke from its Edmonton refinery, which will not be affected by Suncor's decision, spokesman Trevor Cochran said in an email.

Suncor's halting of petcoke shipments from Fort McMurray will not have a significant effect on prices, said the trader, who called the company's export volumes a "drop in the bucket" in the global markets.

Suncor's Cochran said the move does not affect existing take-or-pay agreements, calling that factor "irrelevant" compared with the high transportation costs.

source: http://www.platts.com