Denver Post
Suncor's Commerce City refinery supply OK despite fire in Alberta

Tuesday, May 10, 2016

The massive wildfire in northern Alberta has cut off a resource that supplies a fifth of the crude oil used in Colorado's only petroleum refinery.

But a quick resumption in oil-sands production, an abundance of crude in U.S. storage and alternative sources from abroad make it unlikely the region will suffer any fuel or asphalt shortages, analysts said.

"There has been minimal impact on our refinery network," said Sneh Seetal, spokeswoman for Calgary-based Suncor, which owns and supplies a refinery in Commerce City.

A rapidly expanding wildfire swept through the town of Fort McMurray and seemed set to overtake Suncor's facilities 15 miles to the north. The company was forced to evacuate workers and shut in 700,000 barrels a day of production.

But the fire shifted to the south and east, and cooler weather has allowed crews to gain the upper hand in a battle they had been losing. Analysts now estimate Suncor and other producers could resume production in a week or two.

That said, the fire continues to threaten power grids and oil pipelines in the region, complicating transportation, and the region remains parched and vulnerable to future conflagrations.

"It is unclear how much Canadian crude the refinery might have on hand in storage, or that others have in storage, that it can utilize until things return to some normalcy up north," said Tony Starkey, a manager of energy analysis with Platts Analytics, the forecasting and analytics unit of S&P Global Platts.

Suncor's Commerce City refinery could take in more oil from the nearby Denver-Julesburg Basin, although the crude there is lighter than what comes from Canada.

U.S. oil in storage is at historic highs, which makes it easier to replace any lost Canadian production on the open market. Under a worst-case scenario, refineries could fall back to overseas imports.

"Midwest refiners used to regularly import Venezuelan, Saudi Arabian and Mexican heavy crudes," S&P Global Platts said.

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