Oil sands production cut after natural-gas line ruptures

Thu Oct 17, 2013 6:44pm EDT
 
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By Scott Haggett and Nia Williams

CALGARY, Alberta (Reuters) - Canadian oil sands producers who together account for more than half of the region's output began scaling back production on Thursday after their natural gas supplies were cut back due to a pipeline rupture on TransCanada Corp's (TRP.TO: Quote) regional Nova pipeline network.

TransCanada has not yet said when its damaged North Central Corridor pipeline, which as the capacity to carry as much as 1.6 billion cubic feet of gas per day, will return to service. But the closure of the line forced some of Canada's largest oil sands projects to scale back operations as they wait for critical gas supplies to return.

Suncor Energy Inc (SU.TO: Quote) said it is slowing operations at its oil sands projects north of Fort McMurray, Alberta, where production averaged 365,000 barrels per day last month.

The 350,000 bpd Syncrude Canada Ltd oil sands project also has suspended shipments while Canadian Natural Resources Ltd (CNQ.TO: Quote) ramped-down production at its 115,000 bpd Horizon oil sands project and at its Woodenhouse heavy oil operations.

Imperial Oil Ltd (IMO.TO: Quote) said it was moving to suspend operations at its recently opened Kearl oil sands mine. Earlier, Imperial had said output had not been affected. Last month, the company said the project was producing 80,000 barrels per day.

TransCanada on Thursday said the 1.6 billion cubic foot per day North Central Corridor pipeline ruptured in a remote area about 140 kilometers (87 miles) west of Fort McMurray, Alberta.

The rupture cut supplies of gas to oil sands operators, who need the fuel to produce bitumen and for the upgraders that convert it into refinery-ready synthetic crude.

Canadian cash crude prices strengthened after TransCanada issued its warning. Western Canada Select heavy blend for November delivery was last trading at $29.50 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers.   Continued...