(Adds Alliance update, Chicago gas price reaction)
By Nia Williams
CALGARY, Alberta, Aug 10 (Reuters) - Athabasca Oil Corp
ATH.TO said on Monday it has suspended about 84 percent of its
light oil production, the latest Western Canadian producer to
curb output after last week's shutdown of the Alliance Pipeline
APLP.UP natural gas mainline.
The Athabasca cut equals 4,200 barrels of oil equivalent a
day (boe/d), and comes after Alliance declared force majeure on
its 2,400-mile (3,850-km) pipeline after poisonous hydrogen
sulphide entered the system.
The mainline delivers gas and natural gas liquids from
Western Canada and North Dakota's Williston Basin to the Chicago
market.
It accounts for about a third of Canada's daily net exports
to the United States and the shutdown is expected to last
several more days.
The pipeline company, a limited partnership owned by
affiliates of Enbridge Income Fund Holdings ENF.TO and Veresen
Inc VSN.TO , called on shippers to suspend injections on Friday
so the affected gas could be flared off. ID:nL1N10I1MS
Alliance began flaring at its mainline block valve station
near Arcola, Saskatchewan, on Sunday and will add incremental
flares at its Alameda compressor station downstream, the
company's manager of commercial and government affairs, Tony
Straquadine, said.
"We will continue to work to measure gas as we are flaring
it to safely remove the hydrogen sulphide from our system,"
Straquadine added.
Alliance intends to buy natural gas to replace the volumes
lost in the flaring process and help restart the pipeline
quickly.
Gas prices in Chicago were little changed given the high
number of other pipelines feeding into the Midwest region and
near normal temperatures for this time of year.
Chicago gas prices rose 1.7 cents to $2.92 per million
British thermal units.
Athabasca said it managed to shift a portion of its
production from the Kaybob region in west central Alberta to
other pipeline systems.
It joins a number of other oil and gas producers, including
Seven Generations Energy VII.TO and NuVista Energy Ltd
NVA.TO , that have been forced to trim some or all production.
Athabasca said five days of downtime on the Alliance
pipeline would cut its third-quarter light oil production
guidance of 5,000 boe/d by approximately 250 boe/d.
The hydrogen sulphide gas entered the system as a result of
complications experienced by an upstream operator that Alliance
did not name.
However, Keyera Corp KEY.TO said it had a brief
operational upset last Wednesday at its Simonette, Alberta, gas
plant, which resulted in gas that did not meet sales gas
specifications entering the Alliance pipeline.
(Editing by Alan Crosby, Frances Kerry and Peter Galloway)