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Suncor's Syncrude to resume some output in July, full ops in Sept

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By John Benny

July 9 (Reuters) - Suncor Energy Inc said on Monday its Syncrude oil sands project in Western Canada will resume some production in July, sooner than expected, and hit full capacity in September, following an outage last month that disrupted total output.

The disruption at Syncrude, representing 10 percent of Canadian oil production, has tightened Canadian supplies and reduced the crude flow to Cushing, Oklahoma, the delivery point of the U.S. crude futures contract.

Suncor, the biggest stakeholder in the northern Alberta project, said an early investigation showed the cause of disruption was a transformer trip.

Syncrude can produce up to 360,000 barrels per day of crude oil and had been expected to remain down through July.

But Suncor said one of its coker drums, which produces about 150,000 bpd, would return to service during the second half of July.

A second one, which has an output of about 100,000 bpd, is expected to return to service in the first half of August.

Coker units convert mined bitumen from the oil sands into synthetic crude oil.

Suncor expects pipeline shipments from its Syncrude oil sands project to be about 60 percent to 70 percent of total capacity in August.

Western Canada Select (WCS) heavy crude trades at a discount to West Texas Intermediate light oil (WTI), the North American benchmark, in part because of difficulties transporting crude through clogged pipelines from Alberta to U.S. refineries.

Traders reduced that discount for three consecutive days last week as Haywood Securities research predicted a longer start-up schedule that would ease pipeline congestion.

The discount was little changed in early trading on Monday, according to Shorcan Energy brokers.

WTI crude futures eased 0.7 percent to $73.29 per barrel.

The outage will cost Syncrude about 205,300 bpd in lost production in the third quarter, which translates to about 59 percent utilization, AltaCorp analysts wrote in a note.

"We view the update as slightly negative as the project is expected to return to normal operations ... after the acceleration of planned maintenance, resulting in a longer outage than originally anticipated," they added.

Suncor is expected to report the ongoing quarter's results on July 25. The company's Toronto shares dipped 0.4 percent at C$53.74 in morning trade on Monday.

Imperial Oil Ltd, which is majority owned by Exxon Mobil Corp, and China's Sinopec have also invested in the project. (Reporting by John Benny in Bengaluru; additional reporting by Rod Nickel in Winnipeg, Manitoba Editing by Saumyadeb Chakrabarty and Marguerita Choy)