Suncor upgrader on expensive hiatus
50 days to tie upgrader to expansion facilities
Ashok Dutta
Calgary Herald
Friday, June 08, 2007
CALGARY - Suncor Energy Inc. has started a 50-day shut-down of the second upgrader serving its Firebag oilsands project in Fort McMurray -- with production declining by an estimated 135,000 barrels per day.
"Work started on May 31 and production is targeted to resume in the third week of July," said Brad Bellows, manager of external communications at Suncor.
"The work impacts upgrader 2, which began operations in 2001. Production levels will go up and down this year, but our output averaged 270,000 bbl./d in May." The other upgrader is expected to operate at its normal production capacity of about 125,000 bbl./d.
Bellows did not put a figure on what would be the loss in revenue due to the shut-down, but Esa Ramaswamy, at the global oil markets unit of New York-based Platts said it could be "substantial." At current prices, it would mean a loss of about $10 million each day.
Ramaswamy added shutdowns in production facilities or delays in start-up of oilsands upgraders has helped increase Western Canadian synthetic crude prices. "Syncrude's third upgrader was due to resume production on Thursday, but that has been delayed until June 11. This is due to hiccups in (plant) start-up," he said. On a bottom-line cash flow basis, the projected losses in revenues will have little impact on Suncor's balance sheet.
Hugh Mosher, an analyst with Calgary-based AJM Petroleum Consultants, said that the loss in production is part of a normal oilsands operations. "It affects in the sense that there will not be revenues for that period, but in the overall scheme the impact will be minimal," he said.
Bellows said that the shutdown had been long planned and was factored in when Suncor had earlier issued its production guidelines.
At the end of May, year-to-date production averaged 246,000 bbl./d. Suncor is targeting an average oil sands production of 255,000-to-265,000 bbl./d in 2007 -- a downward revision from the original target of 260,000-to-270,000 bbl./d.
On May 30, Suncor announced plans of the shutdown to tie-in with the new expansion facilities that would raise its production capacity to a targeted 350,000 bbl./d in 2008 from current levels of about 260,000 bbl./d.
Nearly 2,000 contractors will be involved in the work, which embraces a number of facilities including the upgrader's cokers, vacuum unit, sulphur plant and cooling tower.
"We will focus on completing the tie-in work in a safe manner while minimizing impacts to the environment," said Suncor.
"Although it may result in periods of increased flaring and the potential of odours, we intend to minimize these impacts and ensure emissions levels remain within regulated limits."
© The Edmonton Journal 2007
