By April 6, 2017 Read More →

Nexen cuts oil sands output due to Syncrude shutdown

Syncrude shutdown

Nexen joins ConocoPhillips in having to reduce production due to the Syncrude fire last month. Pete Potipcoe Facebook photo.

March fire at Syncrude facility leads to shortage of synthetic crude

Nexen Energy is the second Alberta oilsands company to report cutting production due to a shortage of synthetic crude after a fire at the Syncrude plant in March forced a total shutdown of the facility.

The interruption in production at the 350,000 b/d plant has caused Canadian and US crude prices to surge to multi-year highs.

Earlier this week, ConocoPhillips reported it had reduced output at its 140,000 b/d Surmount plant by 40 per cent, according to two anonymous sources in a Reuters report.

On Thursday, Nexen reported it cut output from its Long Lake oilsands project this month by 48 per cent due to a shortage of synthetic crude from Syncrude.  Long Lake usually produces about 40,000 b/d of undiluted bitumen.

Both companies use synthetic crude to dilute bitumen, which makes it suitable for pipelines.

Neither Nexen nor ConocoPhillips told Reuters the how much the production cut amounted to.

Syncrude expects to return to operations during the first week of May, but trading sources say the facility will be running at reduced production that month.

The outages have bumped up Canadian heavy crude prices.  Benchmark Western Canada Select blend for May delivery last traded close to a 22-month high of $9,60/barrel below US crude, according to Shorcan Energy brokers.

On Wednesday, WCS settled at $9.85/barrel below US crude.


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