Brian Zinchuk is editor and owner of Pipeline Online
SASKATOON – In late September, Federated Co-operatives Limited (FCL) announced it was selling its upstream oil production. During the Oct. 21 announcement of the FCL/Whitecap Resources Inc memorandum of understanding on carbon capture, utilization and storage, FCL president and CEO Scott Banda was asked about the sale of those upstream oil producing assets. Specifically, he was asked if it had to do with the Co-op’s goal to reduce its carbon footprint.
Banda replied, “No, not really. They’re vaguely related. But at our refinery in Regina, we process 130,000 barrels a day of crude oil. That’s what we’re capable of doing and we’ll run lower than that, depending on demand. So remember that: 130,000 barrels a day.
“Our crude oil production right now is around 3,000. So, it’s not material to our operation, and also the location of where our assets are, we do not use the crude oil we produce.”
For sale is 550,000 hectares across Saskatchewan, Alberta and British Columbia. FCL’s website notes, “The majority of assets are in southern Saskatchewan.”
Some of its producing assets he referred to are in the extreme southeast corner of the province, near Carievale. Oil from that region is generally shipped by pipeline to the Enbridge Mainline terminal at Cromer, Manitoba. That terminal is downstream of the Regina refinery, which is built directly adjacent to that same Mainline. Since the oil only flows from west to east on the Mainline, none of its southeast Saskatchewan oil would find its way back to Regina unless it was trucked that way.
Banda said, “So this has essentially been, as it’s turned out over the years, an investment, and we’re looking for a return. And we realized several years ago that this was not strategic to our operations.
“We actually had these assets for sale about five years ago as well. We’re in no panic. We didn’t achieve the numbers we wanted to, so we let them sit and made the decision this spring that this year was going to be a better year to try and sell those assets. So, we have moved down that that path. So, it’s a very, very small piece of Federated Co-op’s operations. And we’re looking to take any revenue we can gain and reinvest, obviously, into our operations, and sustainable operations, here for the long term,” Banda said.
At the same time, FCL is selling its stake in the Weyburn Unit, which will be the destination for any carbon dioxide captured by FCL if it goes ahead with its planned carbon capture and storage projects.
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