Petro-Canada Sees La Ceiba Synergies with Montreal Refinery

Canadian oil company Petro-Canada (NYSE: PCZ) could process oil produced from its La Ceiba development in Venezuela at its Montreal refinery, which will be upgraded to process heavy crude, president and CEO Ron Brenneman said during a conference call to discuss Q3 results.

Petro-Canada is planning to upgrade its Montreal refinery by installing a coking unit to process more heavy crude, which "could have synergies" with the La Ceiba development, Brenneman said. "There could be some synergies there because this is a field that would produce conventional heavy oil, about 20 degrees API.

In fact that is what we're talking about converting our Montreal refinery to run more of," he said. However, "it's also a crude we could readily sell in the open market so I wouldn't attribute any value to the fact we might be producing heavy crude in Venezuela and at the same time upgrading our refinery in Montreal," he said, adding they are "independent decisions."

Petro-Canada and its 50:50 partner, US oil company Exxon Mobil, plan to start production at La Ceiba by 2008 "at the earliest," Brenneman said.

Petro-Canada and Exxon Mobil filed a declaration of commercial viability with the Venezuelan authorities on September 30, 2005.

"We're in the process of sorting that out with the authorities," he added. Petro-Canada and Exxon Mobil anticipate filing a provisional development plan by the end of the year, Petro-Canada said in its Q3 earnings statement.

"We've completed the long-term production test, which was quite important from a reservoir point of view, so we have demonstrated the economics of this development from our perspective," Brenneman said.

"It's a fairly conventional development and because we have some of the infrastructure in place, it's not a particularly long lead investment," he added.

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