Exxon Mobil Corp.’s Imperial Oil shut down its oil-sands mine after a spill from a pipeline that supplies diluent to the operation, adding to the woes of Canada’s beleaguered energy industry.
Imperial announced the ramp-down of its Kearl mine in northern Alberta on Wednesday, following a leak Saturday that led Inter Pipeline Ltd. to shut the west segment of its 240,000-barrel-a-day Polaris system. The diluent Polaris supplies to sites operated by Imperial and Husky Energy Inc. is mixed with the sticky bitumen they produce so that it can be shipped by pipeline.
The disruption is just the latest blow to Canadian crude producers that had been struggling with a lack of pipeline infrastructure and competition from shale before the COVID-19 pandemic slashed demand from the U.S. refineries they supply.
The Western Canadian Select crude benchmark for October delivery strengthened relative to West Texas Intermediate. Its discount to the U.S. benchmark has narrowed by $1.40 a barrel over the past two days to $9.40. Before Tuesday, the gap hadn’t fallen below $10 since Aug. 17, NE2 Group data show.
Imperial said the Kearl mine is ready to ramp up to full production rates once diluent supply is restored, and it’s pursuing steps to try to mitigate the impact of the outage.
The area where the break in the pipeline is believed to have occurred has been identified, and the company is working to remove “product” from the shut-in section, Shawn Roth, an Alberta Energy Regulator spokesman, said Wednesday. The AER hasn’t received a request to resume service on the line.
There was no estimate for a restart of the impacted segment of the Polaris system, Inter Pipeline said Tuesday. The east segment of the pipeline, which supplies some other oil-sands sites, is fully operational.