March 30, 2010 / 10:09 PM / in 8 years

Canadian Natural oil sands output nearing capacity

* March output seen at 100,000-105,000 bpd

* Looking for capacity rate by mid-year

CALGARY, Alberta, March 30 (Reuters) - Canadian Natural Resources Ltd CNQ.TO said on Tuesday it expects oil sands output at its C$9.7 billion ($9.5 billion) Horizon project will climb to near capacity volume this month after a series of mechanical problems.

Canada’s largest independent oil explorer said production of synthetic crude wrung from oil sands at the northern Alberta site will average 100,000-105,000 barrels a day in March, up from just over 84,000 in February.

The company is targeting a reliable volume of 110,000 barrels a day by the middle of this year. That is the capacity of the first phase of Canada’s fourth major oil sands mining project, which started up last year.

Once it achieves steady production rates, Canadian Natural will hammer down the design and cost of the second phase, executives have said.

Output has fluctuated since October as Canadian Natural dealt with such issues as high clay content in the ore and mechanical problems at the upgrading plant.

It hit a recent low point of 42,000 barrels a day in December, due to mechanical problems at the upgrader’s hydrogen plant and an extended shutdown of the furnace at the coker, equipment that turns the tar-like crude from the oil sands into refinery-ready oil.

Shares in Canadian Natural rose 35 Canadian cents to C$73.80 on the Toronto Stock Exchange.

$1=$1.02 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson

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