HF Sinclair will take advantage of a steepening Western Canadian Select heavy crude price discount as the U.S. refinery operator has been benefiting from processing the relatively cheaper oil feedstocks, Chief Operating Officer Steven Ledbetter said Wednesday.
In the company's third-quarter earnings conference call, Ledbetter told analysts that HF Sinclair -- which has a total refinery throughput of 678,000 b/d -- has the ability to run above 100,000 b/d of heavy crude feedstock including a good portion of it as WCS.
Ledbetter said the current WCS discount -- between $25/bbl and $30/bbl below the price of the West Texas Intermediate benchmark -- is beneficial to the company's operations of its seven U.S. refineries in the Midcontinent and Pacific Northwest regions.
"We think in the near term we will take advantage of it. We think that moderates, but we do see that differentials stay wider than they have throughout the near term, at least through 2027," he said.
Canadian crude prices have been under pressure for years due to a perennial bottleneck created by insufficient pipeline capacity to export markets. In addition, a recent sharp surge in global tanker freight rates related to the Middle East conflict also forced oil producers to cut their prices further, Ledbetter said.
In addition, HF Sinclair's 165,000 b/d El Dorado, Kan., refinery is slated to process an additional 10,000 b/d of heavy crude, as the facility is currently wrapping up turnaround maintenance that includes a vacuum tower furnace project that will also improve yield, Ledbetter said.
In terms of M&A, Ledbetter said the majority of HF Sinclair's growth will focus on "mainly organic opportunities," and the company's management has been pleased with its joint venture in its marketing segment that has continued to grow.
"Growing and scaling JVs, having exposure to the rack-to-retail, and the full suite of that integrated value delivery is something that we like," he said.
In February, HF Sinclair formed Green Trail Fuels, a 50-50 joint venture with UPOP Holdings. HF Sinclair has said it aims to strengthen its Sinclair brand in the Rockies and Southwest with its marketing segment JV that has 30 retail sites across Colorado and New Mexico supplied by HF Sinclair's nearby refineries.
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