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Record output, more explosions — life in the Alberta oil sands business
Because of its high-tech nature, the Alberta oil sands business is a constant roller-coaster of fortunes, seldom more than in recent weeks.
A high point for the three operations where the raw bitumen is extracted by traditional surface mining methods was word that output grew by 100,000 barrels per day or 20 percent in 2004, nudging 590,000 bpd.
Before a spate of accidents involving Syncrude Canada and Suncor Energy, the Canadian Association of Petroleum Producers had forecast a further surge to 680,000 bpd this year, now an unlikely proposition.
Topping the 2004 mining list was Syncrude, the world’s largest producer of synthetic crude, which no sooner announced its own record volumes in 2004 than it was hit by a plant explosion on Jan. 30 that will cut first quarter production by 25 percent.
It was also Syncrude’s second setback in about six weeks, coming after a power outage in December that shaved 10 percent off output for three weeks.
The Syncrude explosion occurred in the same month that an explosion and fire forced Suncor Energy to scale back its 2005 production by more than 50 percent or 115,000 barrels per day until at least July. Suncor surged by 26,000 bpd Of the three mining projects, Syncrude surged by 26,000 bpd to 238,000 bpd, beating its 2002 benchmark of 232,000 bpd; Suncor lost 1,000 bpd in averaging 215,600 bpd; and Shell Canada’s Athabasca project more than doubled from its 2003 start-up year to average 135,500 bpd, but short of its 155,000 bpd design capacity because of fourth-quarter maintenance and repairs.
Syncrude is less concerned about the impact of its mishap and expects it will still achieve the 2005 goal of 80 million to 86 million barrels or about 220,000 bpd to 235,000 bpd, according to 35.49 percent owner Canadian Oil Sands Trust.
Stepped-up maintenance and a rapid turnaround of other Syncrude units will keep the goal in sight.
The explosion, whose cause is still being investigated, put one of three hydrogen plants, used to remove sulfur from the raw bitumen, out of commission.
The unit was in the midst of a normal start-up following a scheduled maintenance turnaround.
It will remain offline for an “undetermined period of time” until the cause of the explosion is known.
The accident came only two days after Canadian Oil Sands Trust posted fourth-quarter profits of C$122 million, up from C$57 million a year earlier.
—Gary Park
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