* Initiatives take care of 90 pct of price exposure
* Marketing arrangements, hedging mitigate discounts
* U.S. refinery to be "debottlenecked"
CALGARY, Alberta, Jan 24 (Reuters) - Cenovus Energy Inc has refining capacity, supply arrangements and hedging contracts in place to deal with 90 percent of its exposure to deeply discounted Canadian heavy crude oil prices this year, its chief executive said on Thursday.
Cenovus, known for its Foster Creek and Christina Lake steam-driven oil sands projects in Northern Alberta, has a 50-50 joint venture with Phillips 66 that involves ownership in the Wood River refinery in Illinois and Borger plant in Texas. The companies recently completed a major project to boost capacity to process heavy crude at Wood River.
The arrangement has allowed Cenovus to withstand the wide price differentials on Canadian heavy crude that are pressuring bottom lines across the industry, CEO Brian Ferguson said.
However, Ferguson stressed the company has other marketing and risk-management initiatives as oil sands production increases with future oil sands project phases.
"We do start to get a little bit long in heavy oil as we bring on the next phase of Christina Lake in the third quarter of this year," Ferguson told investors at a conference in Whistler, British Columbia. "There are ways also to achieve economic integration -- not just coking capacity."
Coking is a process in refining that breaks down the heavy components in the crude so it can be turned into gasoline and other petroleum products.
Surging oil sands production and tight pipeline capacity have led to discounts for Canadian heavy crude that have recently been more than $40 a barrel under benchmark West Texas Intermediate. That has pushed the price to less than half a barrel of international benchmark Brent oil.
The industry is anxiously awaiting a decision by Washington on whether to approve the $5.3 billion Keystone XL pipeline, which, it is expected, would to reduce the price disparity by opening up a major new market in the U.S. Gulf Coast region.
Enbridge Inc's C$6 billion ($6 billion) Northern Gateway project, which would send to oil to the British Columbia coast for shipment to lucrative Asian markets, is currently the subject of public hearings.
Some of Cenovus's shorter-term economic solutions include buying 12,000 barrels per day of firm, or guaranteed, capacity on Kinder Morgan's Trans Mountain pipeline between Alberta and the Pacific Coast, and signing a five-year supply agreement with a refiner at a fixed price spread that is much smaller than the current market one, he said.
The company has also hedged the price differential on some of its heavy oil production.
In addition, Cenovus and Phillips 66 are working on ways to "debottleneck" the 362,000 bpd Wood River refinery to increase its capacity to process heavy crude by 5 percent to 10 percent, Ferguson said.
Cenovus shares were up 44 Canadian cents, or more than 1 percent, at C$33.49 on the Toronto Stock Exchange. They are down about 8 percent in the past year.