Oilsands Cuts Down On Production As Oil Prices Increases
For the first time in almost two years, price of crude in Canada is at the verge of its narrowest discount due to a shortage of production which occurred at the Syncrude oilsands facility in northern Alberta as a result of closure.
Syncrude happens to be one of the top producers when it comes to oil sands in Canada, diluting remains from tar into a heavy blend than can be to flow through pipeline channels. It is a joint ventured mostly owned by Suncor Energy Inc. with business management maintenance, coupled with technical and operational assistance from Imperial Oil Ltd.
Due to a fire outbreak that happened in the previous month, causing damages to the facility and eventually triggered operators to come up with a maintenance plan; sources from the market disclosed that the Syncrude project which was producing 350,000 barrel per day was terminated for the whole of April to nothing. Production for the Surmont thermal plant has been reduced by ConocoPhillips to 140,000 bpd, this is because the crude used by them from Syncrude is light synthetic.
Spokeswoman for ConocoPhillips mentioned in an email; “(The) Syncrude outage has had an impact on our output, but we are working with suppliers to understand the timeline as the Syncrude owners work towards a full recovery.”
The discount on the volume of crude was not stated, but with the collective outage of Syncrude, increased to 490,000 bpd or at least by one fifth of the oilsands’. 2.5 million bpd of supply is off the market, hypothetically speaking. To add to that, the 180,000 bpd Firebag thermal plant provided by Suncor Energy will be going through prearranged repairs this quarter, in addition to the lack of heavy crude.
Most of what Canada produces is exported to the United States, about 3.1 million bdp, with about 4 million bdp produced by Canada.
Prices has increased as a result of the abrupt lack of supply, prices for Western Canada Select’s main mixture of oil derived from Canada’s oilsands is now $41.35 per barrel. That’s the most expensive it has been since summer of 2015.
The difference between U.S. average, West Texas Intermediate and Canadian oil has tapered to its least level in about two years, each barrel for $9.80.