Oil sands giant makes second cut to 2003 production

Gary Park

Petroleum News Calgary correspondent

Unscheduled maintenance at the Syncrude Canada oil sands operation will put a severe dent in 2003 production, which is now expected to average about 211,000 barrels per day, well short of the consortium’s capacity of 260,000 bpd.

Canadian Oil Sands Trust, the largest stakeholder in the Syncrude consortium at 35.49 percent, announced the second revision in less than two months.

At the same time, operating costs are expected to climb as high as C$20.50 per barrel from a previous target of C$19.25-$19.75.

The setback stemmed from Syncrude’s decision in early October to remove one of two cokers, which upgrade oil sands bitumen into refinery-ready light crude, for earlier-than-expected maintenance. That cut output in half.

Outages are not uncommon at Syncrude, Canada’s largest single source of oil and the world’s largest synthetic crude producer.

But they are having no impact on Syncrude’s ongoing C$5.7 billion expansion that is scheduled to boost volumes by 50 percent to 360,000 bpd in 2005.

So far more than C$3.7 billion has been spent on the expansion, which will add a third coker to the bitumen upgrading process and a second oil sands production train at the Aurora mine.

Canadian Oil Sands Trust has hedged 33,000 bpd or 39 percent of its anticipated share of Syncrude sweet blend production in 2004 as part of covering its C$470 million share of the expansion program.

The hedging covers 8,000 bpd at C$37.58 (about US$28.94) per barrel and the remaining 25,000 bpd at US$24.74 per barrel.