UPDATE 1-Nexen expects Long Lake oil sands shutdown to take two weeks

Tue Sep 1, 2015 5:16pm EDT
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(Adds company comments and background, paragraphs 5-12)

By Mike De Souza and Nia Williams

CALGARY, Sept 1 (Reuters) - Nexen Energy, the Canadian subsidiary of Chinese state-owned CNOOC Ltd, is shutting down its Long Lake oil sands operations in northern Alberta in response to an emergency regulatory order, a company spokeswoman said on Tuesday.

Nexen estimated the shutdown process would take up to two weeks as it suspends pipeline operations and attempts to demonstrate to the Alberta Energy regulator that its pipelines are safe.

The provincial regulator ordered Nexen to shut in 95 pipelines at the Long Lake facility last Friday as part of an investigation into one of the largest-ever oil-related pipeline spills on North American soil, discovered in July.

The incident dealt another blow to Canada's oil sands industry in northern Alberta, which is under fire from environmental groups for its carbon-intensive production process.

Long Lake was producing about 50,000 bpd of bitumen before the spill, which is upgraded on site into refinery-ready synthetic crude. The upgrader also processes raw bitumen from other oil sands projects.

Nexen declined to comment on Tuesday about the impact on production, adding that it does not typically disclose production information on an individual asset basis. Nexen spokeswoman Diane Kossman said the suspension order was not expected to have any material impact on CNOOC's operations or financial conditions.

Synthetic crude prices rallied hard on Monday after news of the Long Lake shutdown. A separate production outage at the Syncrude oil sands project sent traders scrambling to secure supply, and extended those gains on Tuesday.   Continued...