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Kearl oilsands mine stops output due to diluent pipeline shutdown

Last Updated Sep 2, 2020 at 5:03 pm MST

Imperial Oil logo at the company's annual meeting in Calgary on April 28, 2017. Imperial Oil Ltd. says it has shut down production at its Kearl oilsands mining operation in northern Alberta because of the partial shutdown of the Polaris diluent pipelien following a spill near Fort McMurray. THE CANADIAN PRESS/Jeff McIntosh

Imperial Oil Ltd. said it has stopped production at its Kearl oilsands mining operation.

The decision is due to the partial shutdown of the Polaris diluent pipeline following a spill near Saprae Creek.

The Calgary-based company said its facilities will be kept ready to be restarted as soon as the pipeline is back in service and diluent supply is restored.

Imperial Oil added it is looking at other unspecified options.

No word from Imperial on how much production it will sideline.

Analyst Travis Wood of the National Bank said it expected Kearl to produce an average of 157,000 barrels per day of bitumen in the current quarter.

RELATED: Inter pipeline safety crews dispatched to Saprae Creek

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.

The pipeline moves light petroleum such as condensate from Edmonton to the region.

Oilsands companies use the product 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 said on its website.

A spokesman couldn’t confirm how much diluent is still being delivered.

This report includes excerpts from The Canadian Press.