Connacher cuts back oilsands projects

Connacher Oil and Gas Ltd. of Calgary has slashed production from its Great Divide Pod One oilsands plant by almost half and suspended construction at a second plant, Algar, where the company has spent $110 million of the $345 million budgeted.

The company cited "the rapid and recent deterioration" in oil markets in a release Monday.

It said the cuts were prompted by:

Lower crude oil prices.The seasonal widening of heavy-oil price differentials.Bottlenecks and other market factors which are hurting cruide oil prices.

However, "we do not expect this set of circumstances to persist for a protracted period of time," the company said.

Pod One, which has produced more than 9,000 barrels a day and was heading for targeted capacity of 10,000 bbl/d, will be cut back to 5,000 bbl/d.

Algar, which was expected to come on stream late in 2009, is expected to produce 10,000 bbl/day.

A six-month delay will add about $18 million to the Algar project, not including interest charges.

Connacher stock fell 14 cents to 92 cents in TSX trading. It has been as high as $5.26 in the past year.