Canadian Natural advances upgrader, profit falls
By Jeffrey Jones and Maneesha Tiwari
(Reuters) - Canadian Natural Resources Ltd (CNQ.TO: Quote) and its partner, North West Upgrading Inc, said on Thursday they are proceeding with a C$5.7 billion ($5.7 billion) oil sands upgrading plant in Alberta at a time when some of their rivals are slowing down spending over fears of high costs.
Canadian Natural also reported a sharper-than-expected 57 percent drop in third-quarter profit and cut its output forecast. Shares of the country's larges independent oil explorer and producer slid 4 percent.
Canadian Natural and privately held North West plan to build the plant near Edmonton, starting construction in the spring of next year.
The facility, which has been on the drawing board for eight years, will process extra-heavy crude from the tar sands into low-sulfur diesel fuel and other petroleum products. The initial capacity will be 50,000 barrels a day and it could eventually be expanded to 150,000.
The green light comes at a time of growing fear that cost overruns and delays that plagued the Alberta oil sands industry before the financial crisis of 2008 and 2009 could creep back as development of the massive resource accelerates.
The oil sands sector also faces increasing competition from surging volumes of unconventional light crude supplies from regions such as the North Dakota Bakken.
Indeed, Suncor Energy Inc (SU.TO: Quote) said last week it was holding off on construction of its 200,000 barrel a day Voyageur upgrader, a joint venture with France's Total SA (TOTF.PA: Quote) that had been slated to start operations in 2016, citing the explosion in unconventional crude output.
However, Canadian Natural and North West plan to produce petroleum products at their refinery, rather that just synthetic oil that would be shipped to other North American refineries. Continued...