Imperial Oil stops production at Kearl after Inter Pipelines leak

Imperial Oil halts Kearl oil sands production Imperial Oil says production at its Kearl oil sands mine has ceased as a result of an unspecified third-party diluent pipeline outage. Imperial says it’s prepared to resume operations at Kearl once the pipeline is back up and running, but there’s no timeline on that. BNN Bloomberg’s Andrew Bell reports.

EDMONTON — 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.

Cleanup is underway east of the Fort McMurray airport after 90 cubic metres of diluent leaked from Inter Pipeline’s Polaris system.

Diluents are fluids used to thin heavy oil so it flows easier.

The leak was detected early Saturday morning, but crews didn’t find the condensate on the ground and begin containment until that afternoon.

A segment of the Polaris pipeline remained shut down as of Monday after the company found the source of the leak near the Saprae Creek community.

According to Inter Pipeline, environmental and wildlife monitoring had begun Saturday, and there was no risk to the public.

The entire Polaris system can move 865,000 barrels of oil per day between the oilsands at Kearl Lake, operated by Imperial Oil, and Lamont, Alta.

Imperial, a 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.

“This is a blow to Imperial if it continues,” BNN’s Andrew Bell commented.

“We hear about these pipelines, these giant pipelines – the Keystone, it’s had its problems over the years, and that of course is very obvious when it’s a large export conduit – but we kind of forget the massive numbers, the hundreds of thousands of barrels of oil per day that are used by the oilsands in this diluent… The whole system is connected intricately.”

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.

Inter Pipelines has not said what caused the leak.

The Kearl oilsands have an estimated 4.6 billion barrels of recoverable bitumen, Imperial says.

Production at the site began in 2013 and expanded in 2015, bringing its total capacity to 220,000 barrels per day.

Inter Pipelines’ Polaris system was expanded in 2015 in tandem with the Kearl expansion.

With files from CTVNews.ca and The Canadian Press