Nexen to lay off 350 workers, admits to failure in two investigations

Nexen Energy is laying off about 350 employees after shelving plans to restart part of its Alberta oilsands operations damaged by a blast in January that left two workers dead.

Ron Bailey, head of Canadian operations at Nexen, says that after an extensive investigation it found that the explosion at the Long Lake facility was caused by staff doing work they weren't supposed to be doing.

"We have a specific work scope that we say we should do. They were working on something other than that," said Bailey at a news conference Tuesday.

But, he added, the company, a wholly subsidiary of Chinese state-owned firm CNOOC Ltd., couldn't release further details about the incident — including what work was being done when the blast happened — because investigations are on-going.

Nexen did however release details of its separate investigation into a pipeline leak at the same oilsands site last July that spilled about five million litres of bitumen, sand and produced water over a 16,000-square metre area.

The company concluded that the June 11 rupture — which happened about a month before it was discovered by a contractor — was a result of an incompatible pipeline design for the muskeg ground conditions.

Bailey explained there was not enough soil on top of the recently-installed pipeline so that as the high-pressure pipe went through temperature fluctuations it began to buckle.

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."

Zhi added that Nexen has determined there is no short-term fix to the damaged caused by the January blast, so the company is indefinitely idling the upgrader portion of the Long Lake facility.

The decision means the company will lay off about 350 employees at the Long Lake site and in Calgary by the end of the year.

But Bailey said 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.

The Canadian Press