January 11, 2011 / 12:22 AM / 7 years ago

Canadian Natural hopes to resume upgrader output

CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd said on Tuesday its Horizon oil sands upgrader may be able to produce as much as half of its 110,000- barrel-a-day capacity while repairs are under way after last week’s fire.

The company has not yet set a repair schedule or inspected the damage to the upgrader’s coker unit following the Thursday fire, said John Langille, Canadian Natural’s vice-chairman.

Even so, the company believes two of four drums in the unit were undamaged by the blaze, allowing it to resume some production after shutting the facility after the fire.

“Hopefully, at the end of the day we’ll still be able to operate two of the cokers while we’re repairing the damage,” Langille said at an investor conference. “If that’s the case then we can maybe get to around half our normal production.”

The fire, which injured five, was in one of the oil sands project’s coker drums. The cokers, which operate in pairs, are a key part of the process of upgrading bitumen stripped from the oil sands into refinery-ready synthetic crude oil.

Provincial government investigators put a stop-work order on the coker after the fire, preventing Canadian Natural’s staff from inspecting the damage. However that order was partially lifted on Tuesday, allowing personnel into a control room at the site.

“This will let them assess damage,” said Sorcha Thomas, a spokeswoman for Alberta Occupational Health and Safety. “The stop-work order remains in effect for the rest of the area.”

The plant, the newest major project in Alberta’s oil sands, cost C$9.7 billion ($9.8 billion) to build. The company said it has a $2 billion insurance package to cover the cost of repairs as well as the operating costs for the facility after 90 days.

The loss of Horizon, which produced about 10 percent of the country’s synthetic crude oil, has pushed up prices for Canadian light synthetic crude. It had traded for as much $4 less than the price of benchmark West Texas Intermediate crude before the fire and has since risen to just above the benchmark price.

Langille said the repairs will likely alter Canadian Natural’s 2011 spending plans and lower its oil production for 2011, which had been expected to range between 449,000 and 486,000 barrels a day.

The damage will also mean changes to the company’s capital plan but Langille did not offer details.

Canadian Natural share rose 90 Canadian cents, or 2.2 percent, to C$42.50 on the Toronto Stock Exchange.

Reporting by Scott Haggett; editing by Rob Wilson

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