Norway Plans to Develop a New $570-Million Oil and Gas Field
An unscheduled suspension of operations at Syncrude's upgrader in Alberta has lifted Canadian oil prices substantially, also strengthening U.S. blends that make up WTI, as the bulk of Canadian synthetic crude and heavy oil sands crude is exported to its southern neighbor.
As a result, prices of Canadian heavy crude jumped to the highest in two years, while the price of synthetic crude, which is what the Syncrude facility produces and a lot of oil sands producers use, rose to a four-year high. The spread between WTI and Western Canadian Select shrank to $9.80 per barrel, the narrowest since 2015, Bloomberg said.
The suspension was prompted by a fire at the upgrader last month. The fire put a temporary stop to oil production at the Syncrude project, majority-owned by Canadian Suncor, which will be in effect throughout April. However, a Suncor spokeswoman told Bloomberg that pipeline deliveries of "finished product" from the upgrader will be restored at up to 50 percent of the usual rate later this month.
The Syncrude upgrader, which processes bitumen from the Alberta oil sands, producing synthetic oil, is the second-largest such facility in Canada, with a daily throughput of 350,000 bpd. Related: Tanker Traffic Points At Much Tighter Oil Markets
As a result of the fire and consequent suspension for repairs, ConocoPhillips, which produces heavy crude from bitumen extracted at its Surmont project, has had to shrink its 140,000 bpd output. Conoco has to mix its Surmount output with synthetic oil from the Syncrude facility, and quite a lot of it-40-60 percent of the end product-in order for the oil to be shipped south via pipelines. The disruption comes as Conoco plans to bring the total daily production rate of Surmount to 150,000 bpd by the end of this year.
Aggravating the problem of Canadian crude supply are other upgraders who are undergoing scheduled maintenance, which has so far taken off 76,000 bpd from daily output.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
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