Nexen to cut 350 jobs in Canada after oil-sands upgrader blast

CALGARY, Alberta (Bloomberg) -- Cnooc Ltd.’s Nexen Energy unit will eliminate 350 jobs this year after deciding not to repair its Long Lake oil-sands upgrader in northern Alberta following an explosion in January.

The facility, which turns bitumen into light synthetic crude oil, cannot be feasibly repaired in the short term, executives said on a conference call with reporters on Tuesday. Workers will lose their jobs at Long Lake, as well as at the Calgary headquarters, they said. Nexen plans to continue producing bitumen from Long Lake and to make a decision about whether to again pursue upgrading at the site later this year, taking into consideration changing market conditions.

The explosion of a hydrocracker in the upgrader that killed two Nexen employees is among recent challenges for Cnooc in Canada, which also included a pipeline leak last year at Long Lake and a May wildfire that forced production offline. Production at the site is ramping up from just under 15,000 bpd currently to a targeted 27,000 bpd in the next month, and Cnooc said it remains committed to the oil sands.

“We are facing extremely tough market conditions since mid-2014 and it’s tough for the whole industry,” Fang Zhi, CEO of Nexen, said on the call. “We continue to see Nexen as a significant platform for the international development of Cnooc’s business.”