PLANT

Flooding closes BC natural gas plant, forcing CNRL to shut wells

Plant operator doesn't expect full production to resume until December.

August 5, 2016   by CP Staff

CALGARY — Flooding in northeastern BC in June that exposed pipes and washed out an access road at a natural gas processing plant, prompting it to shut down, has interrupted about 10% of gas production by Canadian Natural Resources Ltd., the company said.

In its second quarter report, Canada’s largest gas producer said the closure of the Pine River Gas Plant has forced it to cap wells that were producing 176 million cubic feet of natural gas per day.

Canadian Natural Resources said the operator of the plant, Spectra Energy, expects full production to resume in December.

“It obviously impacts us. You can see production was impacted in the quarter and it’s impacted the guidance for the year,” Canadian Natural Resources president Steve Laut said in an interview.

“As far as (financial) impacts on the company, I think it’s relatively minor because gas netbacks are fairly low right now so it doesn’t hurt our cash flow that much.”

The closure in mid-June reduced gas production by an average of about 50 million cf/d for the three months ended June 30, Canadian Natural Resources said. Second-quarter gas output fell to about 1.69 billion cubic feet per day from 1.79 billion cf/d in the first quarter.

Canadian Natural Resources reported a net loss of $339 million in the quarter, an improvement from last year’s net loss of $405 million. Revenue was $2.55 billion, down from $4.73 billion but slightly above an estimate of $2.4 billion.

The company reported overall production of 784,000 barrels of oil equivalent per day in the quarter, down 3% from the same period of 2015.

A voluntary shutdown of the company’s above-ground Primrose East pipeline in northeastern Alberta to investigate stress corrosion and cracking reduced heavy oil output by 13,000 bpd in the quarter, Canadian Natural said. On a conference call, chief operating officer Tim McKay said the pipeline was repaired and restarted in May and the company is investigating the cause of the problem.

Canadian Natural said an expansion of its Horizon oilsands mining project is on track to start up as expected in October and take full capacity to 182,000 bpd in November. The next expansion phase is to start up in late 2017 and will add 80,000 bpd of capacity.


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