Incident Report

Subject:                   Fire shuts down Syncrude coker, injures two workers

Date of Email report:   Thu 08/03/2012

Report Detail:

CALGARY — Two men were sprayed with hot bitumen and received minor burns on Friday night after opening a valve at the Syncrude Canada oilsands upgrader, Alberta Occupational Health and Safety reported Monday. A fire that followed burned until 3 a.m. Saturday and resulted in one of three cokers being shut down, cutting output by about 100,000 barrels per day. But the department reported Monday afternoon that it had cleared the scene, giving control back to Syncrude. “I understand there are some repairs to be done prior to restarting the coker, but nothing that requires OHS approval prior,” said Barrie Harrison, a spokesman for Occupational Health and Safety, in an e-mail. Siren Fisekci, a spokeswoman for Canadian Oil Sands Ltd., the project’s largest shareholder with 37 per cent, said the fire is considered minor but there is no estimate as to when the coker will be back in service.

Harrison said earlier Monday that Syncrude said the men were taking part in a routine valve test when the incident happened and the bitumen didn’t catch fire until after they had left the area. One worker was taken to Syncrude’s medical centre and the other to hospital. Fisekci said both workers are available to return to work, adding Syncrude is still assessing damage. Synthetic crude prices strengthened Monday after news of the shutdown reached oil markets. Syncrude’s two other cokers continue to operate normally, Fisekci said. The 350,000-barrel-a-day upgrader is located about 40 kilometres north of Fort McMurray. Canadian Oil Sands had said in its year-end financial report that the affected unit, Coker 8-1, would undergo a maintenance shutdown in February.

Fisekci said that work was completed faster than the 30 days budgeted for it and the coker had been restarted and was operating at the time of the fire. She said she didn’t know where or how the fire started, how much damage had been done or where the damage was centred. Trevor Gemmell, a spokesman for Alberta Environment and Water, said Syncrude reported the fire to the government early Saturday morning, advising that it was contained and under control. He said the company reported only crude oil was burning and that it was isolated to a pipe rack system near a coker area but not in the coker itself. Syncrude reported the fire extinguished by 3:20 a.m. Cara Tobin, spokeswoman for the Energy Resources Conservation Board, said an ERCB inspector was dispatched to the site on the weekend.

Canadian Oil Sands stock closed Monday down 74 cents at $22.73. Phil Skolnick, an analyst for Canaccord Genuity, pointed out in a note to investors that there have been fires over the years in almost every oilsands upgrader that’s been built. “Whether this turns out to be a minor event or not, investors are likely going to view this as another cause of concern around upgraders and continue to favour non-upgrader operations,” he wrote. Last year, a fire at Canadian Natural Resources Ltd.’s Horizon oilsands upgrader shut it down for more than seven months. Suncor Energy Inc.’s Upgrader 1 was out for two months in 2010 and its Upgrader 2 was down for a month in 2009 because of fires. Syncrude had a fire in Coker 8-3 in 2007 but the effect on output was minimal. Syncrude production in the fourth quarter of 2011 was reduced by an outage of its largest hydrogen unit. The project’s reliability record has been cited by operating partner Imperial Oil Ltd. in a decision last year by the consortium to postpone billions of dollars in expansions until after 2020. Its upgrader converts bitumen into a light, sweet synthetic oil that is shipped to refineries in the Edmonton area and through Enbridge Inc. and TransCanada Corp. pipeline systems to the U.S Midwest

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