Canadian Oil Sands Halts Crude Production at Oil-Sands Giant Syncrude

Canadian Oil Sands Ltd. , the largest owner of the giant Syncrude oil-sands project, said on Sunday that it has halted production after a fire damaged equipment at its synthetic crude oil processing facility in northern Alberta.

The company said the fire, which occurred early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil-sands surface mine. The cause of the blaze is under investigation, it said.

While the upgrader’s core machinery wasn’t damaged and the strip mine continues to operate, Canadian Oil Sands said in a statement issued late Sunday that “synthetic crude oil production has been temporarily suspended while a recovery and repair strategy are being developed.”

Canadian Oil Sands didn’t estimate the volume or value of the lost production. Syncrude’s synthetic crude output averaged 207,700 barrels a day in the second quarter and it sold for about 74.47 Canadian dollars ($56.28) per barrel. The company has forecast an average realized price of C$65.75 a barrel for the full year.

The incident adds to the woes of a company that has struggled with unplanned equipment outages at Syncrude and a slide in crude oil prices to six-year lows.

It comes less than a week after Moody’s Investors Service cut Canadian Oil Sands’ credit rating to one notch above speculative grade [on August 24] and just one month after the Calgary-based company posted a second quarter net loss [on July 30].

Canadian Oil Sands holds a 37% stake in Syncrude Canada, with six other companies owning the remainder, including the lead operator,  Exxon Mobil Corp.  unit  Imperial Oil Ltd. , and  Suncor Energy Inc.,  Canada’s biggest oil producer. Unlike its partners, Canadian Oil Sands depends entirely on Syncrude’s output.

On July 30, Canadian Oil Sands said it lost C$128 million, or 26 Canadian cents a share, in the three months to June 30, compared with a net profit of C$176 million, or 36 Canadian cents a share, in the year-earlier period. Its net debt rose to C$2.4 billion, up from C$2.2 billion in the previous quarter.
http://www.wsj.com/articles/canadian-oil-sands-halts-crude-production-at-oil-sands-giant-syncrude-1441006210

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