CALGARY, Alberta (Reuters) - The price of oil sands synthetic crude strengthened on Wednesday after the majority owner in the Syncrude oil sands project in northern Alberta said maintenance on the facility had been extended.
Suncor Energy Inc (SU.TO) said late on Tuesday that Syncrude will not return to full rates until mid-July after maintenance scheduled to take place in the autumn of 2017 was added on to an ongoing turnaround.
Syncrude is cutting 17.24 percent of its June production, from 5.8 million barrels to 4.8 million barrels, according to two sources with knowledge of the matter.
The plant, which can produce up to 350,000 barrels per day (bpd) of synthetic crude at full capacity, is instead shipping 130,000 bpd to customers, Suncor said. Those volumes are expected to ramp up as maintenance on various units wraps up.
Light synthetic crude from the oil sands for July delivery climbed to last trade at 75 cents per barrel over the West Texas Intermediate benchmark, according to Shorcan Energy brokers, having settled at 65 cents per barrel over WTI on Tuesday.
Syncrude has been operating below capacity since March when a fire damaged the facility and forced Suncor to bring forward planned maintenance.
The blaze started after a split in a carbon steel line in a naphtha hydrotreater, and most of the damage was to a piperack next to the hydrotreater containing piping, cables and electrical circuits.
Suncor said there is no change to its overall 2017 production guidance as a result of the extended maintenance.
The company’s shares were last down 3.1 percent at C$39.61 on the Toronto Stock Exchange.
“We view the update as being negative as the outage has once again shown to be larger than expected,” AltaCorp Capital analyst Nick Lupick wrote in a note to clients.
The volume cuts have helped prop up the price of synthetic crude, and also tightened supply of heavy crude, because some oil sands producers need synthetic barrels from Syncrude to blend with their bitumen so it can flow through pipelines.
Western Canada Select heavy blend crude for July delivery last traded at $10.45 per barrel below WTI, little changed from Tuesday’s settle of $10.50 per barrel under the benchmark.
Additional reporting by Catherine Ngai in New York; Editing by James Dalgleish and Lisa Shumaker