UPDATE 2-Athabasca cuts output as Alliance gas pipeline shutdown continues

Mon Aug 10, 2015 5:28pm EDT
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(Adds Alliance update, Chicago gas price reaction)

By Nia Williams

CALGARY, Alberta Aug 10 (Reuters) - Athabasca Oil Corp said on Monday it has suspended about 84 percent of its light oil production, the latest Western Canadian producer to curb output after last week's shutdown of the Alliance Pipeline natural gas mainline.

The Athabasca cut equals 4,200 barrels of oil equivalent a day (boe/d), and comes after Alliance declared force majeure on its 2,400-mile (3,850-km) pipeline after poisonous hydrogen sulphide entered the system.

The mainline delivers gas and natural gas liquids from Western Canada and North Dakota's Williston Basin to the Chicago market.

It accounts for about a third of Canada's daily net exports to the United States and the shutdown is expected to last several more days.

The pipeline company, a limited partnership owned by affiliates of Enbridge Income Fund Holdings and Veresen Inc, called on shippers to suspend injections on Friday so the affected gas could be flared off.

Alliance began flaring at its mainline block valve station near Arcola, Saskatchewan, on Sunday and will add incremental flares at its Alameda compressor station downstream, the company's manager of commercial and government affairs, Tony Straquadine, said.

"We will continue to work to measure gas as we are flaring it to safely remove the hydrogen sulphide from our system," Straquadine added.   Continued...