Nexen Energy is to lay off a total of 350 workers at Long Lake and the Calgary headquarters throughout this year.
This follows the company’s decision not to resume operations at its oil sands upgrader in Long Lake, northern Alberta.
“Nexen has conducted comprehensive investigations into the pipeline failure in July 2015 and the January 2016 explosion at its Long Lake Oil Sands facility to determine the root cause for each incident,” the company said in a statement.
350 Jobs Go At Nexen Headquarters
The facility was processing bitumen into light synthetic oil and cannot be repaired in the short-term, company executives said told media sources.
As a result, workers are expected to lose their jobs at Long Lake and at the Calgary headquarters.
Meanwhile, the company will continue producing bitumen from Long Lake and should make a final investment decision about returning to the upgrader later on this year.
The company said it has been facing tough market conditions since mid-2014, but will remain a significant platform for the international development of the business.
After a review, Nexen concluded that a short-term repair for the upgrader is not feasible and is putting it into winter preservation mode with no date set for a restart.
Nexen Remains Positive Towards Oil Sands Future
The first incident happened in June 2015. It was a pipeline leak that spilled about five million litres of bitumen, sand and produced water, resulting in oil sands production going offline.
Most likely, it was the result of an incompatible pipeline design.
In the beginning of this year, a hydrocracker exploded in the upgrader, killing two employees.
According to Nexen, this explosion was the result of work being performed outside the scope of approved work activities.
Nevertheless, the company remains positive about its future and committed to an increase in production in Canada, even though other oil sands companies have been abandoning their plans for new upgraders.