In Calgary, Alberta, Nexen Energy and Conoco Phillips have cut production of crude at their facilities, starting this week due to synthetic crude shortage.
This has caused Canadian crude price to reach an all time high, causing difficulties for Canadians.
The reason behind this shortage of synthetic crude is because of the fire in March at the Syncrude plant that produced 350,000 bpd (barrel-per-day). Due to this fire, the operator of the plant was forced to carry out heavy maintenance work, which reduced the production of crude in April to zero.
Due to this immediate and zero decline in production, Conoco Phillips has to reduce production at its Surmont project, which was a joint venture with Total E&P Canada. The company produces 140,000 bpd and reduced this production by 40%.
Conoco Phillips uses Syncrude’s synthetic crude and mixes it with tarry bitumen that comes from their oils sands reservoir. Both crudes make “synbit”, which is a heavy blend that flows through the pipelines. As for CNOOC (CEO) subsidiary Nexen Energy, that uses synthetic crude in order to create dilute bitumen had to cut its output of the oil sands project at Long Lake by 48% this month.
Long Lake has a production of 40,000 bpd, which was also affected by the decline in the synthetic crude output. However, the company’s
spokeswoman Michelle McCullagh did not disclose how much cuts were being made in the production.
According to Brittney Price, the spokeswoman of Nexen Energy, the company does not disclose maintenance operations or publish production output for individual assets.
Suncor Energy Inc. and Syncrude, two companies that are in a joint venture, where the former company runs the majority of the operations, believe that by 1st May, they will start production again. However, the production will be done at a reduced rate.
Though the price per barrel has significantly increased, it still remains below that of the US. If the production does not reach the same level as before, it’s possible that Canada might be looking at a huge loss locally and internationally.