Extreme Cold Disrupt Oil Production and Refining in Western Canada
Canadian oil refiners have pared processing rates this week as extreme chilly weather grips Western Canada, merchants acquainted with the matter said.
Cold weather has spread throughout western Canada this week. In Edmonton, the capital of Canada’s central oil-producing region, Alberta, temperatures dropped to minus 36 degrees Celsius Wednesday, based on Environment Canada.
Syncrude, one of many largest producers of crude oil from Canada’s oil sands, as well as North-West Refining, which operates the Sturgeon refinery, has declared force majeure, two merchants familiar with the matter stated.
Force majeure is a declaration that unforeseeable circumstances prevented a party from meeting a contract.
Syncrude is a collaboration majority-owned by Suncor Energy, with minority stakes held by Imperial Oil and others. It may produce as much as 360,000 barrels per day, upgrading thick bitumen to light oil.
In the meantime, Shell Canada’s Scotford facility is operating at decreased rates, two sources mentioned. The Shell Scotford Complex consists of a bitumen upgrader, oil refinery, and chemical compounds plant. Shell refused to comment.
Upgraders need natural fuel to create steam to produce the hydrogen that turns bitumen into synthetic crude oil.
The weather-related interruptions are the newest in a series of points to hit the Canadian oil industry.
Inventories are already at record highs as a result of a recent blackout on the Keystone pipeline and a Canadian National rail strike.