Canada’s oil sands industry has been hit by another outage at a major plant, after a Suncor Energy Inc. upgrader was taken down for unplanned maintenance Tuesday.
The Suncor problem follows similar problems at Canadian Natural Resources Ltd. , where an upgrader has been taken out of service until later this month, and another issue at Syncrude Canada Ltd., where a March 2 fire took out part of its upgrading operations out for 30 days.
Together, the three outages have taken nearly 400,000 barrels of synthetic crude production out of the Canadian market, a major decline that will likely boost the price of oil that has sagged in recent weeks.
Upgraders are much like refineries, using extreme heat – 450 degrees Celsius and more – to take the thick, heavy oil sands crude and transform it into a lighter synthetic, or manufactured, crude. That synthetic crude can then be sent to traditional refineries to be made into end products like gasoline, diesel and jet fuel.
Because of the heat they employ, and the extreme north-eastern Alberta environment they operate in, upgraders are an element of oil sands operations that tend to experience major incidents. A fire at the CNRL Horizon plant last year, for example, knocked out that company’s upgrader for eight months. Both Syncrude and Suncor have experienced fires at their operations.
The confluence of outages is nonetheless remarkable, since it means much of the province’s upgrading capacity is now down.
Suncor said late Tuesday that the maintenance affects one of its two upgraders, called U2, which “will be taken offline for unplanned maintenance due to a U2 fractionator performance issue.” Repairs to the upgrader are expected to take three to five weeks.
Suncor said the fix won’t affect its annual production guidance, but its oils ands output will diminish to 140,000 barrels a day. The company had pumped 326,500 barrels per day in the fourth quarter of 2011.
The outages come amid a depression in Canadian oil prices triggered by a glut of crude washing into the U.S. Midwest, the principal export market for oil sands output. Light synthetic crude has traded at a $10 to $25 (U.S.) a barrel discount to West Texas Intermediate , the U.S. benchmark price. Discounts of that nature tend to shrink when supply is diminished, as it has been with the Suncor repairs.
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SU-T 31.95 -0.37
-1.145% 4.194M Canadian Natural Resources
CNQ-T 31.1 -0.11
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CL-FT 93.87 -0.38