A production shutdown at Syncrude Canada’s oilsands mine, is expected to free up pipeline space out of Western Canada and raise prices for Canadian heavy oil.
The company has said production could remain offline through July after a power outage late last week forced Syncrude to stop its production of upgraded bitumen.
In a research report, Canadian analysts with Tudor Pickering Holt & Co. say the stoppage should help alleviate pipeline congestion in Western Canada that has increased the difference in price for Western Canadian Select bitumen blend oil versus New York-traded West Texas Intermediate crude oil.
The differential spiked at about US$30 per barrel in February, fell to the high-teens in April and May as oilsands projects went through maintenance shutdowns, but rose again in the past few weeks as output again fills pipelines. It closed at US$25.50 last Friday.
The analysts say the news is negative for Suncor Energy Inc., which owns about 59 per cent of Syncrude, and Imperial Oil Ltd., with a 25 per cent stake.
Syncrude’s production capacity is 350,000 barrels per day of crude oil.