June 8, 2012 / 7:59 PM / in 6 years

Synthetic spread narrows after Shell fire

CALGARY, Alberta (Reuters) - The discount on Canadian light synthetic crude shrunk a bit on Friday after a fire damaged a unit at Royal Dutch Shell’s (RDSa.L) oil sands upgrader in Alberta.

Light synthetic for July delivery was last quoted at $5.50 a barrel under benchmark West Texas Intermediate, compared with $6 under WTI on Thursday, according to Shorcan Energy Brokers.

Shell said on Friday that a small fire had damaged a unit at the 255,000 barrel a day Scotford upgrader located near Edmonton. It did not specify the unit or what the impact on production was, other that to say it was not material.

The plant processes bitumen from the Athabasca Oil Sands Project in northeastern Alberta into light, refinery-read oil, some of which is used at Shell’s adjacent refinery.

Spreads for heavy crude widened, however, with several refineries in Canada and the United States undergoing maintenance, the latest being Marathaon Petroleum’s (MPC.N) 206,000 bpd plant in Robinson, Illinois, which began planned upkeep on Thursday.

July Western Canada Select heavy blend last sold for $25.25 a barrel under WTI, compared with $25 under on Thursday.

Market sources said there had not been a price reaction yet to the shutdown of part of Plains All American’s (PAA.N) 83,000 bpd Rangeland pipeline system following an oil spill in west central Alberta.

According to Crude Quality Inc, the system moves mostly conventional light crude from fields in west-central Alberta to Edmonton area refineries or to the U.S. border, where it connects with the Glacier pipeline system.

Reporting by Jeffrey Jones; editing by M.D. Golan

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