Canada crude-Synthetic climbs as Syncrude output lags

Tue Apr 2, 2013 3:52pm EDT
 
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* May light synthetic quoted at $10.25/bbl above WTI

* Syncrude produces well under capacity in March

* WCS for May $14.10/bbl under WTI

CALGARY, Alberta, April 2 (Reuters) - Canadian light synthetic crude prices climbed to a new six-month high on Tuesday after the owner of the largest interest in Syncrude Canada Ltd reported lower-than-expected production at the massive Alberta oil sands operation.

Light synthetic for May delivery last sold for $10.25 a barrel over benchmark West Texas Intermediate, up 75 cents from Monday's settlement, according to Shorcan Energy Brokers. It was the biggest premium since Oct. 2.

Canadian Oil Sands Ltd said on Monday that Syncrude produced 261,000 barrels a day of synthetic crude in March, up 9 percent from February but still well under the facility's 350,000 bpd capacity.

Canadian Oil Sands, which has a 37 percent interest in Syncrude, blamed the lagging output on unplanned outages in its upgrading operation, including the hydrogen production and hydrotreating units.

Syncrude's weak production performance came as Suncor Energy Inc was set to start seven weeks of planned maintenance on the 100,000 barrel per day Upgrader 1 unit at its own northern Alberta project site. The overall oil sands plant can also produce about 350,000 bpd.

Meanwhile, Western Canada Select heavy blend for May was quoted at $14.10 a barrel under WTI, compared with a settlement of $14.90 a barrel on Monday. That was its smallest discount since Oct. 3.

Part of the recent strength in Canadian heavies - WCS fetched $40 a barrel less than WTI in January - has been the slow start-up of the first phase of Imperial Oil Ltd's 110,000 Kearl oil sands project. That has kept previously anticipated volumes out of the market, industry sources have.

Imperial said Monday it expects to start producing marketable diluted bitumen from the C$12.9 billion ($12.69 billion) project in "the next few days."