Nexen to dismiss 350 employees following pipeline explosion investigations

About 350 jobs will be eliminated by the end of this year after Nexen Energy decided not to continue with the repair of its Long Lake oil-sands upgrader in northern Alberta following an explosion in January.

There is no short-term repair for the damage in the facility, which processes bitumen into light synthetic crude oil, according to executives during a session with the press on July 12. The company will cut workers from its Long Lake and Calgary headquarters, but will still continue to produce bitumen from the Long Lake facility at lower costs and improved safety and reliability.

Chinese state-owned firm CNOOC Ltd. acquired Nexen in 2013. It has dealt with a pipeline leak last year at Long Lake and a wildfire in May that forced oil-sands production offline. The company has decided to shut down its upgrader further into so-called winter preservation and no date has been set for the plant’s return to full service.

According to the company’s investigations, the explosion was the result of employees doing work outside of what has been approved.

Nexen has also released the findings of an investigation into the June 2015 pipeline rupture, which spilled about 5 million liters (1.3 million gallons) of bitumen, sand and produced water into a 16,000-sq m land area. According to results, the leak happened after a pipeline incompatible with the ground conditions buckled, and the company’s monitoring processes didn’t immediately detect it. Nexen is changing its pipeline planning and operations policies to prevent future incidents.

Company chief executive Fang Zhi said that the company takes responsibility for both incidents. “As a responsible operator, we are fully accountable for the conduct of work of any of the individuals that are on our site,” said Zhi. “We failed ourselves, our employees, and the community around us, through those two incidents.”

“We failed to live up to our own highs standards of safety and environment,” Zhi said. “This is not acceptable.”

Executives also said that the steam-based oil extraction at the site will continue, ramping up in about a month to roughly 27,000 barrels a day from the 15,000 barrels a day it currently produces.