March 14, 2012 / 9:39 PM / 6 years ago

Canada crude-Synthetic crude surges on Suncor outage

CALGARY, Alberta (Reuters) - Canadian light synthetic crude prices surged $10 on Wednesday after Suncor Energy Inc (SU.TO) said one of two upgrading units at its northern Alberta oil sands operation would be down for up to five weeks of unplanned repairs.

Synthetic for April last sold for $11 a barrel under benchmark West Texas Intermediate, compared with $21 a barrel under on Tuesday. Early deals on Wednesday were done for as narrow a discount as $5 a barrel under.

The jump extends weeks of wild volatility in Canadian cash crude markets as processing units at three oil sands ventures tripped off line unexpectedly, repair schedules fluctuated and a U.S. Midwest pipeline run by Enbridge Inc (ENB.TO) was shut by a drag-racing accident. Meanwhile, overall export pipeline capacity has remained tight.

On Tuesday, differentials had widened when Syncrude Canada revised its production forecast upward for April after pushing back planned maintenance on one of three coker units in its upgrading operation. That adds about 137,000 barrels a day of output for the month to its previous outlook.

It postponed the upkeep after another coker unit had to be taken down for unplanned work.

Later in the day, Suncor said it would shut its Upgrader 2 for three to five weeks to fix a fractionator problem, cutting production to about 140,000 barrels a day.

The outage comes after months of record production at the plant.

Overall capacity at each of the tar sands plants is about 350,000 barrels a day. Upgraders turn bitumen from the oil sands into refinery-ready light oil.

Adding to the mix, Canadian Natural Resources Ltd (CNQ.TO) said late on Tuesday it was restarting its 110,000-barrels-a-day Horizon oil sands plant after shutting it down for repairs in early February. Shipments are expected to begin on Thursday, the company said.

As late as December, synthetic sold at a premium to WTI.

In heavy crude, Western Canada Select for April delivery was quoted at $33.75 a barrel under WTI, compared with $34 under on Tuesday.

Reporting by Jeffrey Jones; Editing by Peter Galloway and Dale Hudson

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