Long Lake upgrader to be restarted six years after fatal explosion

CNOOC Ltd. plans to restart an oil sands upgrader at its Long Lake site that was shut six years ago after a fatal explosion.

A partial resumption will occur by March, according to documents filed with the Alberta Energy Regulator. If successful, the upgrader could become fully operational again. The restart is coming as crude oil prices touch seven-year highs. The type produced in an upgrader was trading at an 80-cent premium to oil futures as of Tuesday, the largest since September, according to NE2 Group.

The project will allow Long Lake to produce the more expensive form of crude oil at a time when the company is expanding the site to produce nearly 100,000 barrels a day. The upgrader converts a thick, sticky type of crude called bitumen into a more valuable, lighter one. Without the upgrader, CNOOC was still pumping almost 6,605 cubic meters (around 42,000 barrels) of bitumen a day in November, AER data show.

The application to restart was filed with the AER in November and marked as “reassigned” on Jan. 17. An email to the agency late Tuesday wasn’t returned nor was an email to CNOOC.

Long Lake is the only thermal oil sands well site in Canada that contains an upgrader. Usually, they’re found at oil sands mines. The explosion at the site in early 2016 killed one worker and injured another.

(Bloomberg News)