July 27, 2018 / 12:08 PM / 4 months ago

Imperial Oil seeks to diversify refinery's supply after Syncrude outage

(Reuters) - An unplanned shutdown this summer of Canada’s Syncrude oil sands site has caused Imperial Oil Ltd (IMO.TO) to look to lessen its biggest refinery’s reliance on it, Imperial’s chief executive said on Friday.

Imperial holds a 25 percent stake in Syncrude, which is majority owned by Suncor Energy Inc (SU.TO). It was forced to shut down last month after a power transformer failed.

Syncrude’s 360,000 barrel per day mine and oil upgrading site in northern Alberta accounts for 10 percent of Canada’s oil production. Nearly all of Imperial’s share of its output feeds the Strathcona refinery to produce gasoline and other products, accounting for one-third of the refinery’s oil supply, Chief Executive Rich Kruger said.

“When Syncrude has an unplanned event, the supply folk at Strathcona do need to scramble, and unfortunately they have had to scramble the last few years more than they would like,” Kruger said on a conference call with analysts.

Imperial is testing the suitability of other types of light and synthetic crude to determine if it should secure other supply agreements for the refinery, Kruger said.

“The Syncrude events are more troubling for their impact on Strathcona. It does affect the ability to run that refinery at the highest level of reliability without disruptions.”

Suncor said this week that some Syncrude production has been restored and full production may come online in September.

Imperial’s second-quarter profit missed analyst estimates by a wide margin on Friday, hurt by higher-than-expected costs from planned maintenance at various projects.

Shares of the company, which is majority owned by Exxon Mobil Corp (XOM.N), dipped 1.3 percent in Toronto.

The company had scheduled maintenance at several projects including a 72-day turnaround at Strathcona.

But cost overruns hurt its bottom line, with analysts at Eight Capital saying the hit from maintenance of about C$250 million, or 31 Canadian cents a share, was bigger than expected.

The company reported net profit of C$196 million ($149.9 million) or 24 Canadian cents per share in the quarter, compared with a loss a year earlier.

On an adjusted basis, it earned 24 Canadian cents a share, while analysts expected a profit of 57 Canadian cents, according to Thomson Reuters I/B/E/S.

Gross production rose to 336,000 barrels of oil equivalent per day from 331,000 boepd a year earlier, but missed some analysts’ estimates.

Reporting by Rod Nickel in Winnipeg, Manitoba and John Benny in Bengaluru; Editing by Marguerita Choy and Bernard Orr

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