Syncrude Cuts Oil Output By More Than 1.5 Million Barrels

  • Dec 04, 2019
  • Investing

Canadian oilsands operation Syncrude has reduced its December crude oil production by 1.6 million barrels according to Reuters, citing three market sources.

The production cutback was due to a operational problem, the sources said, who did not elaborate on what those operational problems were.

Syncrude is one of the largest producers of crude from Albertas oilsands, a joint venture between Exxon’s Imperial Oil Resources, China National Offshore Oil Corporation (CNOOC), Sinopec, and Suncor.

Syncrude also scaled back its oil sales in October by 1.4 million barrels after planned maintenance took longer than expected, according to Reuters. The 360,000 bpd facility has a history of problems, operating at just partial capacity for most of this summer.

While Suncor said yesterday it has plans to raise oil production by 5% in 2020, it said its Syncrude operations would remain adversely impacted due to the continued and disproportionate effect of the production curtailments, which were based on 2018 production, when Syncrude wasn’t operating at full capacity anyway.

Syncrude has fallen on hard times, compounded by a series of “major liability events” over the past three years, Doreen Cole, the managing director of Syncrude said in September, all of which has taken a toll on the company.

Fort McMurray, where Syncrude is based, has been particularly susceptible to the low oil prices, losing 20 percent of its businesses since 2015, according to a report by the Oil Sands Community Alliance.

The production curtailments were designed to arrest the widening gap between the price of WTI and Canada’s benchmark, WCS, which was growing due to the pipeline shortage.

Syncrude is a vital piece of Canada’s economy, contributing more than $30 billion to its economy through wages, royalties, taxes, and goods procurement.