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Annual oil sands maintenance work to reduce output by 5%

March 10, 2022   by Reuters

Annual maintenance work in Alberta’s oil sands will shutter roughly five per cent of Canadian crude output this spring, according to analyst estimates, at a time when global oil supplies face massive disruptions due to Russia’s invasion of Ukraine.

“Based on the guidance from various companies on turnarounds we are assuming 250,000 barrels per day is down for the entirety of the second quarter,” said Matt Murphy, an analyst at energy consultancy Tudor Pickering Holt.

Northern Alberta’s oil sands produce around 3.5 million barrels per day, roughly two-thirds of the country’s total supply, making Canada the world’s fourth-largest oil producer.

This year’s annual spring maintenance season is ramping up just as volatile global oil prices spiked to levels not seen since 2008, and Canadian industry players said the outages will tighten oil supply balances even further.

Suncor Energy Chief Executive Mark Little, speaking at the CERAWeek conference in Houston, Texas this week, said there may be scope for minor adjustments to turnaround schedules as companies try keep producing while oil prices are high, but facilities cannot avoid essential maintenance.

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“I’m not expecting any major changes, just because no one’s going to put their assets at risk from an integrity perspective,” Little said.

Regular maintenance is essential to keep oil sands upgraders, which process raw bitumen into light synthetic crude, and mining and thermal operations, which produce blended heavy crude, running smoothly.

The turnarounds typically last between one and two months and require thousands of extra skilled tradespeople. A tight labor market and the detailed planning involved make it difficult for companies to delay or reschedule the work.

Suncor, Shell, Cenovus Energy, Canadian Natural Resources Ltd. and MEG Energy have publicly disclosed details of maintenance that will take place in the second quarter.

Imperial Oil said last year it is moving to annual spring maintenance at its Kearl oil sands mine, but has not released further details.

Traders in Calgary said a supply crunch for synthetic crude will intensify in May, when both Canadian Natural’s Horizon upgrader and Suncor’s U2 upgrader start maintenance.

Terry Parker, executive director of the Building Trades of Alberta, which represents union working in the oil sands, said the 2022 maintenance season is expected to be similar in intensity to last year.

However, he warned the oil sands may struggle to attract enough staff for the plant turnarounds, as there is a shortage of skilled workers across the country.

“Is there going to be a enough supply of labour? That’s the big question,” Parker said.

(Reuters)


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