Overnight fire at Syncrude oilsands project is under investigation

THE CANADIAN PRESS

CALGARY - A fire at the Syncrude oilsands project near Fort McMurray, Alta., burned for 11 hours before it was extinguished by fire crews at the plant, a spokesman for the province's energy regulator said Wednesday.

Darin Barter, a spokesman for the Alberta Energy and Utilities Board, said the fire broke out around 4:45 p.m. Tuesday, and was extinguished early Wednesday morning.

The blaze, in the flue gas section of one of the plant's three coker units, has disrupted operations at the Syncrude project, officials with the Canadian Oil Sands Trust (TSX:COS.UN) said.

The energy trust - one of the main partners in the Syncrude consortium - said no one was hurt in the incident and the cause of the blaze is still under investigation.

"My understanding is there were no evacuations, no workers were affected and there was no public impact," Barter said from his office in Calgary.

While he said the information provided to the board by the company still had to be verified by board investigators, the EUB has also been told there were no odours associated with the fire that would have affected the public.

Investigators will examine the site of the fire, verify the information they've been given by Syncrude and will assess how the company reacted to it, Barter said.

"We're in the preliminary stages of an investigation and we need to know what exactly happened and what the response was," he said.

A report on the incident could take 90 days, but such reports often take much less time than that, Barter said.

A Syncrude official declined to provide any details about the blaze.

Cokers are massive vessels where bitumen that has been extracted from the oilsands is heated as part of the process for turning the tarry substance into crude oil. Trust officials said the flue gas section of the unit helps scrub particulates and sulphur dioxide emitted during the coking process.

Josh Stewart, a spokesman for Alberta Environment, said that some sulphur dioxide, sulphur compounds and particulates were released during the incident, but the levels fell within acceptable environmental limits.

"There were no public impacts, no environmental impacts and none of the workers on site were affected," he said.

Just what the fire may mean to the plant's production capacity is still unclear, said Trevor Roberts, chief operations officer of the trust.

"We don't know the extent of the damage or the impact," Roberts said from his Calgary office.

"The Syncrude folks will be trying to do a bunch of things - understand what happened and why, understand the extent of the damage, what repairs might look like, how long it might take, how much it might cost."

They'll also try to determine whether the unit could still run while repairs are being made, he said.

"We'll have a view within a few days, but how it actually plays out, I don't know how long it's going to take to figure it out precisely."

The coker unit had odour problems when it was brought on stream last year, Roberts said. Modifications were made to the flue gas section. The unit was restarted in October 2006 and had been operating since then without any problems, he said.

Production in the coker unit, which is capable of producing up to 95,000 barrels of oil per day, has been scaled back to minimum rates. Minimum rates at any kind of refinery or oilsands plant are generally 60 or 70 per cent of full capacity.

"We'll determine the extent of damage and whether or not coker 8-3 will be running at its current limited rates for an extended period of time," said Rob Dawson, treasurer of Canadian Oil Sands Trust. "At that point, we'll look at what our production outlook impact would be."

He said the rest of the plant is running at or near capacity, and the three cokers produced about 310,000 barrels per day last month.

Higher oil prices and higher production levels have helped boost profits for Canadian Oilsands Trust, which reported a jump of 30 per cent in the third quarter.

The trust said its net income was $361 million or 75 cents per unit in the July-September period, compared with $278 million or 59 cents per unit for the same quarter in 2006. Sales volumes were about 124,900 barrels per day, compared with 95,438 barrels per day in the 2006 quarter.

The trust has a 36.74 per cent working interest in the Syncrude Joint Venture, the largest stake. The other partners include Imperial Oil (TSX:IMO) with a 25 per cent stake, Petro-Canada (TSX:PCA) with 12 per cent, and less than 10-per-cent stakes are held by each Nexen Oil Sands Partnership (TSX:NXY), Conoco Phillips Oilsands Partnership, Mocal Energy and Murphy Oil.