3 Min Read
CALGARY, Alberta/NEW YORK (Reuters) - Canada's largest synthetic crude project will return to normal operations toward the end of September, its operator said late on Wednesday, confirming market talk of an extended outage after last weekend's fire.
The Syncrude venture, which produced 326,000 barrel per day of synthetic crude in July, will operate with "minimal synthetic crude oil shipments and operating rates" for the next two weeks as part of a phased recovery, Canadian Oil Sands Ltd, the joint venture partner with the largest stake in Syncrude, said in a statement.
"Affected units are planned to be subsequently restored to operation, with a return to more normal production rates anticipated toward the end of September," it said.
The disruption means that Syncrude output this year will be "near the low end" of the current 96 million to 107 million barrel range for the year, COS said.
The company said the fire had damaged "pipes, power and communication lines on a pipe rack between a hydrotreating unit and its associated amine unit," but did not damage mining and extraction operations or other major upgrading units.
The operating rates of undamaged units have been "safely reduced in a controlled and stable manner," it said.
Cash prices of Canada's synthetic crude jumped on Wednesday, swinging to a premium against U.S. crude on the growing fears of a prolonged outage after the fire at the facility's Mildred Lake upgrader on Saturday. The worries also contributed to a rally in the U.S. crude futures market, traders said.
While some traders originally expected the outage to last for days, three sources said earlier that the company was now anticipating the loss of 6.1 million barrels in September.
Light synthetic crude from the oil sands for October delivery jumped to $2.00 per barrel above the West Texas Intermediate benchmark, according to Shorcan Energy brokers. That was the strongest premium since late June and $6.50 higher than last Friday, prior to the fire.
The front to second month WTI spread tightened on Wednesday, trading from as wide as negative 68 cents up to negative 55 cents around midday, as traders anticipated less crude arriving at Cushing, Oklahoma, the delivery point of the U.S. crude futures contract.
Reporting by Nia Williams in Calgary and Catherine Ngai in New York; Editing by Alan Crosby, Jeffrey Benkoe and Leslie Adler