October 18, 2013 / 12:12 AM / 5 years ago

TransCanada gas deliveries resume after oil sands output disrupted

CALGARY, Alberta (Reuters) - TransCanada Corp (TRP.TO) resumed gas deliveries to most industrial customers late on Thursday after an earlier pipeline rupture in northern Alberta left some Canadian oil producers scrambling to scale back production.

The rupture reduced natural gas supplies for most of the day after a 1.6 billion cubic foot per day North Central Corridor pipeline ruptured in a remote area about 140 kilometers (90 miles) west of Fort McMurray, Alberta.

The outage, which affected producers of more than half of the oil sands region’s output, cut supplies of fuel used to produce bitumen and for the upgraders that convert it into refinery-ready synthetic crude. That forced at least four major oil sands companies to slow or halt output at facilities that can produce more than 800,000 barrels per day of oil. Canada cash crude prices spiked on the news.

“The cause of the line break is not yet known and will be determined during a subsequent investigation,” TransCanada said in an email.

It was not immediately clear how quickly output could be resumed. TransCanada said deliveries to most industrial customers in the area had restarted and it was working with remaining customers to restore full service.

Most companies did not say how much output had been shut in.

“Operating staff have brought our process units into what we call ‘safe park mode,’” said Pius Rolheiser, spokesman at Imperial Oil (IMO.TO), which moved to suspend operations at its recently opened Kearl oil sands mine. Last month, the company said the project was producing 80,000 barrels per day.

“It is too early to say how long operations might be affected.”

Suncor Energy Inc (SU.TO) said it was slowing operations at its oil sands projects north of Fort McMurray, where production averaged 365,000 barrels per day last month.

The 350,000 bpd Syncrude Canada Ltd oil sands project also suspended shipments while Canadian Natural Resources Ltd (CNQ.TO) slowed production at its 115,000 bpd Horizon oil sands project and at its Woodenhouse heavy oil operations.

Canadian cash crude prices strengthened after TransCanada issued its warning early on Thursday, with Western Canada Select heavy blend differentials for November delivery rising as much as $2.50 per barrel. The benchmark last traded at $29.50 per barrel below West Texas Intermediate, slightly higher than on Wednesday, according to Shorcan Energy brokers.

Light synthetic crude from the oil sands for November delivery strengthened by about $1 to $9.50 per barrel below WTI, compared with Wednesday’s settlement price of $10.60 per barrel below the benchmark.

The line break did not affect all operators in the region. Royal Dutch Shell Plc (RDSa.L) said its Albian oil sands mine was operating normally. Cenovus Energy Inc (CVE.TO) said its Foster Creek and Christina Lake oil sands projects were operating as usual.

The North Central Corridor line, built in 2010, is part of TransCanada’s Nova regional natural gas pipeline system.

Reporting by Scott Haggett; Editing by John Wallace, Bernard Orr, Theodore d'Afflisio, David Gregorio and Steve Orlofsky

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