Imperial Oil’s Kearl oilsands mine stops output due to diluent pipeline shutdown

CALGARY — Imperial Oil Ltd. says it has stopped production at its Kearl oilsands mining operation in northern Alberta because of the partial shutdown of the Polaris diluent pipeline following a spill near Fort McMurray.

The Calgary-based company says its facilities will be kept ready to be restarted as soon as the pipeline is back in service and diluent supply is restored, adding it is looking at other unspecified options.

Imperial didn’t say how much production is being sidelined, but analyst Travis Wood of National Bank said in a note Kearl was expected to produce an average of 157,000 barrels per day of bitumen in the current quarter.

Operator Inter Pipeline Ltd. shut down a segment of its Polaris pipeline system on Saturday following a leak detected on Crown recreational land just east of the Fort McMurray airport in northern Alberta.

The pipeline is used to move light petroleum such as condensate from Edmonton to the region where it is used by oilsands companies to dilute heavy bitumen so it will flow in a pipeline to market.

In a report, analysts at Tudor Pickering Holt & Co. warned the shutdown, if prolonged, could potentially affect the supply of diluent for oilsands projects owned by companies including Imperial, Husky Energy Inc., Cenovus Energy Inc. and Canadian Natural Resources Ltd.

In 2019, the Polaris system transported an average of about 238,000 barrels per day of diluent, Inter says on its website. A spokesman couldn’t say how much diluent is still being delivered.

This report by The Canadian Press was first published Sept. 2, 2020.

Companies in this story: (TSX:IPL, TSX:CVE, TSX:HSE, TSX:IMO, TSX:CNQ).

The Canadian Press