Nexen idling Long Lake oil sands upgrader

Nexen Energy ULC reported it will idle the Long Lake oil sands upgrader in Fort McMurray, Alta., by putting it into cold-stack mode. No date was given for when the upgrader would be returned to service.

The Long Lake upgrader gasifies asphaltines from produced bitumen into synthesis gas, which is used as a fuel and source of hydrogen for a hydrocracker. About 350 employees will be laid off by Dec. 31, Nexen executives told reporters at a news conference in Calgary on July 12.

The announcement came after two Long Lake incidents: a 2015 pipeline rupture and a January hydrocracker explosion.

Alberta regulators’ investigations continue regarding the two incidents. Two employees died in a Jan. 15 explosion during maintenance on the hydrocracker (OGJ Online, Jan. 18, 2016).

Nexen’s internal investigation found the blast was caused by what executives called unspecified activities “outside the scope of approved work activities.”

Fang Zhi, Nexen Energy chief executive officer, said the damaged upgrader would not be repaired pending a review of the long-term viability of the oil sands operations amid the oil-price slump.

“The prolonged low-price environment and unique operational challenges that Nexen has faced at our Long Lake facility have factored into this decision,” Zhi said. “Moving to a [steam-assisted gravity drainage]-only operation in the interim is entirely an economic decision.”

Nexen also outlined its conclusions regarding a July 2015 pipeline rupture (OGJ Online, Aug. 31, 2015).

“The root cause of the rupture was a thermally driven upheaval buckling of the pipeline and the subsequent cool down during the turnaround,” Nexen executives said. “This was the result of using an incompatible pipeline design for the muskeg ground conditions. Steps that could have been taken to mitigate the potential for upheaval buckling were not addressed.”

Ron Bailey, Nexen’s senior vice-president for Canadian operations, told reporters that the leak is believed to have happened at least 1 month before it was detected.

“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,” Bailey said.

As a result of the pipeline rupture, Long Lake leaked 5,000 cu m of emulsion—a mixture of bitumen, produced water, and sand (OGJ Online, July 17, 2015).

CNOOC Ltd. acquired Nexen Inc., Calgary, for $15.1 billion as China expanded its holdings in worldwide exploration and production operations (OGJ Online, July 23, 2012).

Contact Paula Dittrick at paulad@ogjonline.com.

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