July 29, 2009 / 2:03 PM / in 9 years

UPDATE 2-Opti says Long Lake at full output by late 2010

* Q2 loss per share C$0.04 vs loss C$0.14

* Says working out problems at Long Lake

* Shares rise a penny (Recasts to add details, updates shares.)

CALGARY, Alberta, July 29 (Reuters) - Opti Canada Inc OPC.TO, which holds a 35 percent stake in Nexen Inc’s NXY.TO Long Lake oil sands project, said on Wednesday it expects the facility to reach peak output late next year as the partners tweak equipment at the recently opened site.

The company, which on Wednesday reported a smaller second-quarter loss, said Nexen is working out the project’s bugs as it looks to boost production at the northern Alberta site.

The thermal project pumps steam into reserves of bitumen, liquefying the tar-like deposits so they can flow to the surface and be upgraded into refinery-ready synthetic crude.

However, the partners have had difficulty ramping up output at the site, keeping production low and pressuring the shares of the pure-play oil sands firm.

Long Lake, built to produce 58,500 barrels of synthetic crude per day from 72,000 bpd of bitumen, is currently averaging just 13,000 bpd of bitumen production because, in part, of problems with steam production.

“The key to the (Opti) story remains successfully increasing steam injection and, consequently, demonstrating a ramp-up in bitumen production,” Andrew Potter, an analyst with UBS Securities, wrote in a note to clients.

Opti said Long Lake’s steam plant will be shut for maintenance in the third quarter, cutting output, but the work should boost steam volumes and let production ramp up through next year.

“We anticipate that the reliability of operations will continue to improve,” the company said in a statement. “We anticipate upgrader capacity during ramp-up will be capable of processing all of the forecast (bitumen) volumes and we expect the project to reach full capacity of approximately 58,500 (barrels per day of synthetic crude) and other products in late 2010.”

Opti’s second quarter loss narrowed to C$9 million ($8.3 million), or 4 Canadian cents a share, from a loss of C$29 million, or 14 Canadian cents, a year earlier.

Analysts were expecting a loss of 13 Canadian cents a share before items on revenue of C$42 million, according to Reuters Estimates.

Opti shares rose a penny to C$1.59 on Wednesday morning on the Toronto Stock Exchange.

$1=$1.09 Canadian Reporting by Scott Haggett and Amit Kumar; editing by Peter Galloway

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