By Robert tuttle sure 03/05/2021
Nexen Oil Sands Facility, Western Canada
CALGARY (Bloomberg) – Major western Canadian oil sands producers will idle nearly half a million barrels a day next month, helping to squeeze global supplies as oil prices soar.
The projects of Canadian Natural Resources Ltd. Performing 30 days of maintenance at its Horizon oil sands upgrader in April will reduce about 250,000 barrels per day of light synthetic crude production, company president Tim McKay said in an interview Thursday. Work on the Horizon upgrader coincides with maintenance at other sites.
Suncor Energy Inc. is planning a major overhaul of its U2 crude upgrader, reducing production by 130,000 barrels per day throughout the second quarter. Syncrude Canada Ltd. will reduce 70,000 barrels per day during the quarter due to unit maintenance.
Supply cuts in northern Alberta, following a surprise OPEC + decision not to increase production next month, could further support the recent rally in crude prices. OPEC + had debated whether to restore up to 1.5 million barrels per day of production in April, but decided to wait.
The Saudi-led alliance is keeping a close watch on other major oil producers as it seeks to manage the entire global market, and the surge in production in North America has been its biggest downfall. -head in recent years – especially in American shale but also from Canada.
Saudi Energy Minister Abdulaziz bin Salman
“The United States, Saudi Arabia, Russia, Canada, Brazil and other countries well endowed with hydrocarbon reserves – we must work together, in collaboration”, said Saudi Minister of Energy , Prince Abdulaziz bin Salman, after the group’s meeting on Thursday.
Canada’s contribution to market equilibrium with less production, like slowing production in the United States, is not a deliberate market management strategy, but it is important nonetheless.
Even though production cuts are short-term, the struggling oil sands industry shouldn’t be of concern to the Saudis in the long term either, judging by McKay’s outlook for the industry.
“I don’t see a lot of growth in the oil sands because there will be less demand in the future,” he said. “The first step is that we need to reduce our carbon footprint.”
After years of increasing production, Canada has become the world’s fourth largest producer of crude, expansion plans have almost come to a halt following two stock market crashes since 2014.
In addition to its struggles, the Canadian oil industry is shunned by some investors such as Norway’s $ 1.3 trillion wealth fund, fearing that the higher carbon emissions associated with oil sands mining will make it worse. climate changes. These forces help make future growth in the oil sands unlikely, said McKay, whose company is among the country’s largest producers.
Oil sands upgraders convert heavy bitumen produced in oil sands mines into lightweight synthetic crude similar to the West Texas Intermediate and Brent benchmarks. Syncrude Sweet Premium for April gained 60 cents Thursday to $ 1.50 a barrel premium at WTI, the highest price since May, according to data from NE2 Group.
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