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Oil-Sands Output Cut as TransCanada Restores Gas Delivery

TransCanada Corp. (TRP) was working to restore gas deliveries to customers in Alberta after a pipeline rupture that caused at least four oil-sands producers to curb output, triggering a spike in Canadian oil prices.

TransCanada’s North Central Corridor system resumed gas shipments to “most” customers after isolating a pipe break and was working with others to restore service, the Calgary-based company said yesterday. Imperial Oil Ltd. (IMO)’s Kearl oil-sands project and Canadian Natural Resources Ltd. (CNQ)’s Horizon upgrader halted output while the Syncrude upgrader stopped shipping product. Suncor Energy Inc. (SU)’s Fort McMurray plant reduced rates.

The drop in production from the plants, with a total capacity of as much as 920,000 barrels a day, sent Canadian crude prices higher yesterday, with Western Canada Select oil advancing $1.20 a barrel against the U.S. benchmark West Texas Intermediate and Syncrude gaining $1, according to data compiled by Bloomberg. WCS climbed another $1.10 to a four-week high as of 9:02 a.m. New York time today.

“Narrowing differentials for WCS and Syncrude are in reaction to reports that CNRL, Syncrude and Suncor are slowing or shutting production,” David Bouckhout, senior commodity strategist for Toronto-Dominion Bank, said in an interview from Calgary. “Production is down on this pipeline rupture and there’s no clarity on how long it will last.”

Process units at Imperial’s Kearl complex were brought “into a safe-park mode,” halting bitumen output, Pius Rolheiser, a spokesman for the company in Alberta, said by e-mail yesterday.

Production Curtailed

The Syncrude upgrader isn’t shipping product, Siren Fisekci, a spokeswoman in Calgary for Canadian Oil Sands Ltd. (COS), the project’s largest owner, said yesterday.

Canadian Natural shut the Horizon upgrader after initially lowering output, and heavy-oil operations at Woodenhouse in Alberta were slowed after gas supplies were disrupted, the company said yesterday by e-mail.

Several natural gas-fired power units that serve the oil industry reduced net generation yesterday, including ones that serve Suncor’s Fort McMurray upgrader, the Syncrude project and Canadian Natural’s Horizon upgrader, according to Genscape Inc. Those units increased power late yesterday and early today.

Suncor’s unit had output of about 319 megawatts at 7:54 a.m. New York time today, up from 255 MW yesterday and below the typical rate of more than 700 MW seen for most of October.

The unit serving the Syncrude project had output of about 271 MW at 7:54 a.m., up from 249 MW yesterday and below typical rates of 350 to 400 megawatts seen for most of October. Horizon’s unit produced about 70 MW at 7:37 a.m., up from zero MW yesterday and below the typical rate of more than 100 for most of the last month.

TransCanada detected a pressure drop on a section of its North Central Corridor system at about 2:50 a.m. local time yesterday, according to an e-mailed statement. The company is still investigating the cause of the line break.

While TransCanada has resumed service on a 24-inch gas pipeline that’s part of the corridor system, the 36-inch line that ruptured remains shut, Rebecca Taylor, a spokeswoman for Canada’s National Energy Board, said by telephone yesterday. The line will remain out of service until the board approves it to restart, said Taylor, who didn’t immediately know how many customers the pipe serves.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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