http://www.wsj.com/articles/nexen-to-idle-oil-sands-facility-after-accidents-1468352641
[links and images in on-line article]
Nexen to Idle Oil-Sands Facility After Accidents
Cnooc’s Canadian unit to cut 350 jobs after pipeline leak, explosion at
Long Lake crude-processing plant
By Chester Dawson
July 12, 2016 3:44 p.m. ET
CALGARY, Alberta— Cnooc Ltd. ’s Canadian subsidiary said Tuesday it
would idle a troubled oil-sands facility following two accidents at the
site, a move that raises questions about the Chinese company’s $15
billion investment in Canadian oil sands.
Nexen Energy ULC, the Cnooc subsidiary, had already cut its oil-sands
production after a July 2015 pipeline leak and then again after an
explosion at its Long Lake crude-processing unit in northern Alberta,
which killed two workers in January. Production at the site has been
limited to just 15,000 barrels a day since then, compared with 50,000
barrels a day this time last year. The company said it would lay off
some 350 employees beyond its previously announced job cuts due to its
decision to scale down operations.
Regulatory authorities in Alberta say their investigations into the two
accidents are continuing.
Nexen CEO Fang Zhi said the damaged processing unit wouldn’t be repaired
pending a review of the long-term viability of its oil sands operations
amid a global slump in crude oil prices. “The prolonged low price
environment and unique operational challenges that Nexen has faced at
our Long Lake facility have factored into this decision,” he told
reporters at a press conference in Calgary.
Nexen said the two employees who perished in the January explosion were
conducting maintenance on part of Long Lake’s oil processing unit known
as a hydro cracker, which turns heavy crude into lighter crude. Its
internal investigation found the men caused the hydro cracker blast by
performing unspecified tasks “outside the scope of approved work
activities.”
The company said the spill of 31,500 barrels of oil on the grounds of
its Long Lake site was caused by the buckling of a six-month old
pipeline that wasn’t properly moored in a marshy area. It faulted its
own assessment of the pipe’s resiliency but also contractors and
subcontractors—who Nexen didn’t identify—with substandard work on the
pipe’s design, construction and installation.
The rupture in the pipeline is estimated to have occurred on June 11
last year during a shutdown for routine maintenance, which was more than
one month before the leak was detected, Ron Bailey, Nexen’s senior vice
president for Canadian operations, told reporters.
“The delay in discovery was primarily the result of shortcomings in the
pipeline’s automatic leak detection system and our ability to monitor
this system,” Mr. Bailey said.
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