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Oil Sands Slowly Coming Online Again, But Thermal Projects Face Risks

Tar Sands

As the fire continues to rage, now moving to more sparsely populated areas, oil sands producers who saw some 1.3 million barrels per day taken offline are now talking about bringing operations back online with varying success, but thermal projects face disaster.

Canadian giant Enbridge expects to resume oil sands shipments from Alberta in a matter of days, after shutting down operations on 4 May in the face of the raging wildfires.

Operations at Enbridge’s Cheecham project resumed yesterday and the company has also said it is ready to restart the Woodland pipeline, though an exact date remains elusive due to ongoing firefighting efforts. Volumes are already being put through Enbridges Waupisco and Athabasca pipelines.

In all, due to the wildfires, Enbridge saw its pipeline volume drop by 900,000 barrels per day out of an average of 2.5 million bpd.

Related: OPEC Is Dead, What’s Next?

Nexen, of CNOOC, has issued a force majeure for its May production, according to Reuters. Royal Dutch Shell Plc has now partly resumed operations at its 255,000 bpd Albian Sands mine. There is still no specific information for the resumption of production at Syncrude Canada’s 350,000 bpd project with Suncor.

Thermal projects, however, are struggling to determine their fate. Some thermal projects in Alberta have been forced to shut down steaming operations due to the raging wildfires, but shut downs pose risks to reservoirs that require continuous production and the fate of these projects now hangs in the balance.

Related: Kuwait Plans To Ramp Up Oil Production By 44% Before 2020

Six Alberta thermal projects have cut 115,000 barrels per day, or 5 percent of the area’s oil sands production

According to industry experts cited by Reuters, if facilities are offline for three to six months, there is the risk of steam turning into water inside the reservoirs This would require pumping and disposal before resuming operations. But there are wider risks as well, if sand collapses into the reservoirs.

Conoco Phillips Canada's President Ken Lueers said the company would face a big learning curve on its 30,000 bbl/d Surmont project, which was evacuated May 4. "The asset is very new, the maximum time we have had steam under the ground is under a year and we don't know how developed those steam chambers are and how they may or may not have dissipated," he said, adding Conoco may have to re-drill some wells if temperature differences cause steel liners to buckle.

By Charles Kennedy of Oilprice.com

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