Western Canadian crude traded at a large discount to WTI
BP profits from cheap Canadian oil thanks to Whiting refinery
BP Plc ran its oil refineries at the hardest rate in 15 years during the third quarter, racing to profit from unusually cheap Canadian crude.
BP is able to profit from cheaper Canadian crude better than its rivals since it spent $4 billion in 2012 and 2013 to overhaul its largest refinery, located in the outskirts of Chicago, to process low quality crude that arrives directly via pipeline from Canada. Whiting refinery can now run on a diet of 85 percent low quality Canadian crude, compared with 20 percent before.
Western Canadian Select crude traded at a discount of about $28 a barrel to benchmark West Texas Intermediate crude during the third quarter, compared with $10.50 a barrel in the same period of last year. Booming production north of the border overwhelmed pipeline capacity and the discount widened to a record of $52.4 a barrel in early October.
BP said its refineries ran at a utilization rate of 96.3 percent during the third quarter, the highest since 2003. Traditionally, oil companies struggle to run their refineries at more than 90-95 percent at any given time as some units are always down due to planned maintenance and outages.
BP started maintenance on Whiting, about 17 miles southeast of downtown Chicago, in mid-September. The plant, with a capacity to process 413,500 barrels a day, is the largest inland refinery in the U.S. The company plans to wrap up the work in early November.