Syncrude has cut its bitumen production for this month due to mechanical disruption, Bloomberg reported, citing an anonymous person familiar with the matter.
This will likely contribute to a rebound in oil prices triggered by demand concerns and tight supply, as much of US production in the Gulf of Mexico remains offline in the wake of Hurricane Ida, which at one point gave shut down more than 95% of Gulf oil production.
Syncrude, majority owned by Suncor, produces some 275,000 bpd of crude oil from bitumen at its upgrader in Alberta, according to the latest data, which was from January to May.
The Financial Times reported last month that Canadian crude oil production reached 3.5 million barrels per day in the first half of 2021 as the industry recovers from the worst effects of the pandemic in its first year. This is a record, which is a bit ironic considering the issues the Canadian oil sands industry has had with regulators, government and its biggest export buyer over the past few years. years.
Protests over pipelines and climate commitments significantly interfered with the industry’s growth prospects, but producers stuck to their guns and continued to mine bitumen and turn it into synthetic crude. Despite the interference, Canada remains the largest supplier of foreign oil to the United States.
Canadian crude prices reflected the situation. Since last year, these have recovered significantly, closing a huge gap with West Texas Intermediate that has opened due to the continued shortage of pipelines. If Syncrude’s force majeure event continues, Canadian oil prices will likely rise even more. The company has yet to make an official statement about the outage.
Meanwhile, Prime Minister Justin Trudeau won another election and immediately pledged to cut emissions from the oil and gas industry. At the same time, production is expected to continue growing, according to the Canadian Association of Petroleum Producers, which sets the stage for an interesting interaction between the next government and industry.
By Irina Slav for Oil Octobers
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