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Suncor’s announcement that its Syncrude oil sands processing facility will return to normal operation this week pressured the prices of Western Canadian Select and Bakken grades, Platts reports.
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Information from traders revealed WCS ex-Hardisty yesterday at one point traded US$10.20 per barrel lower than the calendar month average for WTI, the benchmark, US$0.10 lower than on late Monday. Bakken crude grades fell by between US$0.30 and US$0.50 a barrel.
Western Canadian and Bakken grades benefited from a fire that shut down the Syncrude facility this March. Suncor delayed the restart of operations twice over the last two months, which pushed prices further up.
The March fire at Syncrude was caused by a line failure, which led to a naphtha leak and a consequent explosion. In early July, another smaller fire broke out in a sulfur emissions reduction unit in Syncrude, but it was put out within two hours.
In late July, the Globe and Mail reported that Suncor was having trouble keeping costs at Syncrude under control and that the company has warned that a return to normal operation will take some time. As a result, Suncor cut its output forecast for Syncrude by 3.5 percent to between 130,000 and 145,000 bpd through December 2017. The facility’s daily capacity is 350,000 bpd.
Related: Oil Prices Slip Despite Modest Draw In Crude Inventories
In spite of this downward revision for output from Syncrude, Suncor said in late July its overall oil equivalent output will fall within the range of 680,000 and 720,000 bpd thanks to higher production at offshore projects.
Suncor reported a net profit of US$345 million (C$435 million) for the second quarter of 2017. The company said average daily production from the oil sands stood at 413,600 barrels, versus 213,100 bpd a year earlier, when overall oil sands output was severely affected by forest fires in Fort MacMurray.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.