The Calgary Herald: Refinery problems spark shortages at Shell stations

Supply woes might raise fuel costs

Dina O’Meara, Calgary Herald
Published: Wednesday, February 13, 2008

Problems at one of three major oil refineries in Alberta have sparked a supply shortage for Shell retail and commercial gasoline stations in Western Canada, and might exacerbate an already tight market, experts said Tuesday.

Royal Dutch Shell PLC’s 98,000-barrel-per-day Scotford refinery has been running at reduced rates for several days, prompting the company to ration gasoline and diesel supplies to Shell stations in Saskatchewan, Alberta and northern British Columbia.

Retailers already are reporting low gasoline inventories or missing deliveries early this week, according to local news sources.

“We are certainly making arrangements to import available fuel from other areas of Canada or the U.S. where it’s possible,” Shell spokeswoman Jana Masters said from Calgary.

“At this point we are managing our inventories carefully to ensure our customers continue to receive the products they need.”

Masters would not provide details on what caused the slowdown, or how long operations might be impacted other than to suggest it would be a “short-term” disruption.

The Scotford refinery is the smallest of three operating in Edmonton’s Refinery Row, which supply most of Western Canada.

It is almost half the size of Imperial Oil’s Strathcona facility, which can produce up to 187,000 barrels per day of refined petroleum products such as gasoline and diesel.

However, Imperial won’t be able to help Shell out with extra supply since its own refinery ran into problems last week, spokesman Pius Rolheiser said.

Imperial, Canada’s largest integrated oil and gas company, had to buy gas and diesel from other refiners to make up for the outage, Rolheiser said.

“We are adequately meeting the needs of our own customers, but we would be unable to provide any additional supply,” he told the Herald.

Petro-Canada said it was keeping a close eye on Shell’s refinery outage, and had provided some backup to the company.

“We’re taking action to improve the overall situation and have supplied some product to Shell,” Kelli Stevens said.

Petro-Canada operates the 135,000 bpd Edmonton refinery, which is being converted to upgrade oilsands feedstock exclusively.

Calgary gets virtually all of its gas and diesel supplies from the Shell, Imperial Oil and Petro-Canada refineries near Edmonton, but it’s too soon to tell if prices at the pump will jump in the city, experts said.

“We haven’t seen a change in wholesale prices for gasoline or diesel,” said Cathy Hay with consulting firm MJ Ervin & Associates.

“But the coming days will be telling as we’re able to get a better appreciation of how much production is likely to be impacted by this.”

Shell’s refinery is supplied by the adjacent Scotford upgrader, which processes bitumen from the company’s Muskeg River mine in the Athabasca oilsands.

Arctic cold last week and the week before slowed some oilsands operations to a halt, including construction on Shell’s upgrader expansion. However, the company said it was business as usual for both the mine and the upgrader.

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© The Calgary Herald 2008

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