(Adds company comments and background, paragraphs 5-12)
By Mike De Souza and Nia Williams
CALGARY, Sept 1 (Reuters) - Nexen Energy, the Canadian
subsidiary of Chinese state-owned CNOOC Ltd 0883.HK , is
shutting down its Long Lake oil sands operations in northern
Alberta in response to an emergency regulatory order, a company
spokeswoman said on Tuesday.
Nexen estimated the shutdown process would take up to two
weeks as it suspends pipeline operations and attempts to
demonstrate to the Alberta Energy regulator that its pipelines
are safe.
The provincial regulator ordered Nexen to shut in 95
pipelines at the Long Lake facility last Friday as part of an
investigation into one of the largest-ever oil-related pipeline
spills on North American soil, discovered in July.
ID:nL1N1140O8
The incident dealt another blow to Canada's oil sands
industry in northern Alberta, which is under fire from
environmental groups for its carbon-intensive production
process.
Long Lake was producing about 50,000 bpd of bitumen before
the spill, which is upgraded on site into refinery-ready
synthetic crude. The upgrader also processes raw bitumen from
other oil sands projects.
Nexen declined to comment on Tuesday about the impact on
production, adding that it does not typically disclose
production information on an individual asset basis. Nexen
spokeswoman Diane Kossman said the suspension order was not
expected to have any material impact on CNOOC's operations or
financial conditions.
Synthetic crude prices rallied hard on Monday after news of
the Long Lake shutdown. A separate production outage at the
Syncrude oil sands project sent traders scrambling to secure
supply, and extended those gains on Tuesday. CRU/CA
The order came three days after Nexen gave the regulator an
internal company audit that revealed it was breaking some
pipeline safety rules related to maintenance.
"We're managing the risks associated with safely shutting
down this complex and integrated facility," Kossman said in a
statement.
Last week's order suspended 15 pipeline licences for 95
pipelines that carry a range of products including crude oil,
natural gas, salt water, fresh water and emulsion, the regulator
said. It is also requiring Nexen to demonstrate that its
pipelines can be operated safely.
Nexen apologized for the spill in July, explaining that it
would likely take months to find the root cause of the leak,
which released more than 31,500 barrels of emulsion, a mixture
of bitumen, water and sand.
The regulator said it would not lift the suspension order
until the company demonstrates that it can operate its pipelines
safely.
(Editing by Alan Crosby and Matthew Lewis)