By Jeffrey Jones
NEW YORK (Reuters) - Petro-Canada (PCA.TO: Quote, Profile, Research, Stock Buzz) would rather build its own additional refining capacity than follow its national rivals in buying capacity in the United States, its chief executive said on Tuesday.
Suncor Energy Inc. (SU.TO: Quote, Profile, Research, Stock Buzz), EnCana Corp. (ECA.TO: Quote, Profile, Research, Stock Buzz) and Husky Energy Inc. (HSE.TO: Quote, Profile, Research, Stock Buzz) have bought into the U.S. refining business in an effort to secure processing for Alberta oil sands production, which is expected to surge over the next decade.
Petro-Canada, in contrast, is spending C$2 billion ($1.9 billion) to convert its Edmonton, Alberta, refinery to run oil sands-derived crude solely. It is due to be complete in the third quarter of 2008.
By building its own capacity, it keeps the equity it holds in Alberta oil sands. "We can retain all of our interest in the upstream asset and go ahead and build our own upgrading facility," Petro-Canada CEO Ron Brenneman said at the Reuters Global Energy Summit in New York.
U.S. Midwest refiners, such as Marathon Oil Corp. (MRO.N: Quote, Profile, Research, Stock Buzz) and BP Plc (BP.L: Quote, Profile, Research, Stock Buzz), have been hunting for Canadian oil sands partners as they make plans to retool their refineries amid declining supplies of conventional North American light oil.
Petro-Canada has the project management and financial wherewithal to pursue its integrated oil sands strategy without taking on refining partners, Brenneman said.
"I'm not saying it's not the right thing to do for some companies that don't have that capability. (For them) it's absolutely the right thing to do, but we're not in that situation," he said.
Oil sands and refining represent decades of opportunities for Petro-Canada as the worldwide oil industry struggles to find new assets to reinvest their gusher of cash flow, Brenneman said. Continued...
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