Bloomberg: Shell Says Oil-Sands Output Reduced by Mine Repairs (Update1)

July 6 (Bloomberg) -- Shell Canada Ltd. says production at its oil-sands mine in northern Alberta will be reduced until mid- July because of unscheduled repairs to a processing unit.

The Calgary-based company has shut down a production train capable of producing about 78,000 barrels a day of extra-heavy oil, spokeswoman Jan Rowley said in an interview. A second train at the mine continues to operate.

The cost of repairs hasn't been determined and the lost production will have a bigger financial impact, Rowley said. The company needs several days to empty a settler tank so welders can repair a rake-like piece of equipment that helps separate oil from hot water used in the extraction process, she said.

The mine is part of the Athabasca Oil Sands Project, designed to produce 155,000 barrels a day of bitumen, the extra- heavy oil extracted from Alberta's tar sands.

The project is controlled 60 percent by Shell Canada. Royal Dutch/Shell Group, Europe's second-largest oil company behind BP Plc., owns 78 percent of Shell Canada. San Ramon, California- based ChevronTexaco Corp., the No. 2 U.S. oil producer after Exxon Mobil Corp.; and Western Oil Sands Inc., a Calgary oil company; each own 20 percent.

The joint venture produced 135,900 barrels a day of oil in the first quarter of this year. Second-quarter output will be announced July 22 when Shell Canada releases its financial results, Rowley said.

Shell Canada announced the mine's reduced output after the close of regular trading. The company's shares rose 82 Canadian cents to C$64.32 ($48.48) in Toronto and have climbed 5 percent this year.

To contact the reporter on this story:

Ian McKinnon in Calgary at  imckinnon1@bloomberg.net.

To contact the editor responsible for this story:

Robert Dieterich at  rdieterich@bloomberg.net.

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