Imperial shuts Kearl oil sands output after pipeline spill

(Reuters) - Imperial Oil Ltd on Wednesday said it had shut all production at its 220,000 barrel-per-day (bpd) Kearl oil sands site in Canada due to an outage of part of the Polaris diluent pipeline following a leak. Timing to restart production is unknown, the company said in a release. Imperial is majority owned by U.S. major Exxon Mobil Corp.

The pipeline supplies ultralight oil from Edmonton, Alberta to oil sands sites to be blended with bitumen for transport.

Inter Pipeline, which owns Polaris, detected a leak on its system Saturday and identified the source by Monday, shutting down a segment of Polaris. It reported to the Alberta Energy Regulator a spill of 90 cubic meters (566 barrels) of light oil some 20 kilometers southeast of Fort McMurray, Alberta, regulator spokesman Shawn Roth said.

The impact on fish and wildlife is unclear, Roth said. The spill happened 80 meters from a wetland and one kilometer from the Clearwater River.

The outage is likely to remove 240,000 to 270,000 bpd from the market for at least a few weeks, disrupting U.S. refiners, Credit Suisse said in a note. Apart from the Imperial site, the outage on the 865,000-bpd Polaris line could affect operations at Husky Energy’s Sunrise oil sands facility, Eight Capital said in a note.

The shutdown does affect Husky, but the company has options to mitigate the effects, spokeswoman Dawn Delaney said, without elaborating.

The discount on Canadian heavy oil to West Texas Intermediate dipped by 35 cents per barrel to $9.55, reflecting stronger Canadian prices due to reduced supplies.

Inter Pipeline declined to comment. It said on Monday that cleanup was underway.

Reporting by Arpan Varghese in Bengaluru and Rod Nickel in Winnipeg, Manitoba; Editing by Andrea Ricci