Suncor Energy and partners proceeding with Fort Hills oil sands project
CALGARY, ALBERTA -- (Marketwired) -- 10/30/13 -- Suncor Energy today
announced that, together with joint venture co-owners Total E&P
Canada Ltd. and Teck Resources Limited., it has voted unanimously to
proceed with the Fort Hills oil sands mining project. The Fort Hills
project is located in Alberta's Athabasca region, 90 kilometres north
of Fort McMurray.
"The Fort Hills project is one of the best undeveloped oil sands
mining assets in the Athabasca region, is an excellent fit with
Suncor's diversified production portfolio, and will generate
significant economic value for Suncor, Alberta and Canada," said
Steve Williams, president and chief executive officer. "Given its
combination of ore quality and resource size, we expect this project
will be a significant source of long-term cash flow for the company
and contribute strong returns for our shareholders."
The Fort Hills Energy LP consists of three limited partners: Suncor
(40.8 percent interest), Total E&P Canada (39.2 percent interest) and
Teck Resources Limited (20.0 percent interest). Suncor is the
developer and operator of the Fort Hills project via an operating
services contract. The project will benefit from Suncor's experience
and well established infrastructure in the region.
The project is scheduled to produce first oil as early as the fourth
quarter of 2017 and achieve 90 per cent of its planned production
capacity of 180,000 barrels per day within 12 months. With best
estimate contingent resources of approximately 3.3 billion barrels of
bitumen, the mine life is expected to be in excess of 50 years at the
current planned production rate.
The Fort Hills project has been designed to utilize Suncor's latest
technology and approach to tailings management and reclamation
processes. Suncor will closely monitor operations to allow for
existing and future water quality standards and environmental
requirements to be met or exceeded throughout the life of the
project. The project will aim to return all disturbed lands to as
close to a natural state as possible.
The go-forward capital investment in Fort Hills is estimated at
approximately $13.5 billion ($5.5 billion net to Suncor) and is
expected to account for approximately 15 per cent of Suncor's total
capital budget on average per year. The total project cost is
estimated at a capital intensity of approximately $84,000 per flowing
barrel of bitumen and is within the range of similar recently
completed oil sands mining projects.
"The Fort Hills economics are positive," said Williams. "Great effort
has been made to ensure that our depth of experience and recent
technology improvements in oil sands mines are integrated into the
development of the project. We are delighted that the other owners
share our enthusiasm for this exciting new development."
Analyst/Media Teleconference Dial-in and Webcast Information
Suncor will hold a webcast on Thursday, Oct. 31 at 8:30 a.m. MT
(10:30 a.m. ET) to discuss this announcement. To participate in the
webcast, visit suncor.com/webcasts. Steve Williams and members of
Suncor's executive team will present details of the project, followed
by a question and answer period.
To participate in the question and answer period, please call 1
866-226-1792 (within North America) or 1 416-340-2216 (outside North
Certain statements in this news release constitute "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of applicable Canadian securities
legislation (collectively, "forward-looking statements"). All
forward-looking statements are based on Suncor's current
expectations, estimates, projections, beliefs and assumptions based
on information available at the time the statement was made and in
light of Suncor's experience and its perception of historical trends.
Forward-looking statements in this news release in relation to the
Fort Hills project include references to: the project will generate
significant economic value for Suncor, Alberta and Canada and will be
a significant source of long-term cash flow for the company and
contribute strong returns for Suncor's shareholders; the project is
scheduled to produce first oil as early as the fourth quarter of 2017
and achieve 90% of its planned production capacity of 180,000 barrels
per day within 12 months; the mine life is expected to be in excess
of 50 years at the current planned production rate; Suncor will
closely monitor operations to allow for existing and future water
quality standards and environmental requirements to be met or
exceeded throughout the life of the project; Suncor will aim to
return all disturbed lands to as close to a natural state as
possible; the go-forward capital investment is estimated at
approximately $13.5 billion ($5.5 billion net to Suncor), and is
expected to account for approximately 15% of Suncor's total capital
budget on average per year; the total project cost is estimated at a
capital intensity of approximately $84,000 per flowing barrel and is
within the range of similar recently completed oil sands mining
projects; and the economics of the Fort Hills project remaining
positive. Suncor's expectation that the mine life will be in excess
of 50 years at the current planned production rate assumes that all
resources provided for in this press release are developed.
Suncor's Earnings Release, Quarterly Report and Management's
Discussion & Analysis for the third quarter of 2013 and its Annual
Information Form/Form 40-F dated March 1, 2013 and 2012 Annual Report
to Shareholders and other documents it files from time to time with
securities regulatory authorities describe the risks, uncertainties,
material assumptions and other factors that could influence actual
results and such factors are incorporated herein by reference. Copies
of these documents are available without charge from Suncor at 150
6th Avenue S.W., Calgary, Alberta T2P 3E3, by calling 1-800-558-9071,
or by email request to email@example.com or by referring to the
company's profile on SEDAR at www.sedar.com or EDGAR at www.sec.gov.
Except as required by applicable securities laws, Suncor disclaims
any intention or obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Capital intensity per flowing barrel of bitumen is calculated by
dividing the anticipated project costs of the Fort Hills project by
the anticipated production capacity of the project. This measure is
included because management uses the information to analyze capital
efficiency. Capital intensity per flowing barrel does not have any
standard meaning and therefore is unlikely to be comparable to
similar measures presented by other companies. Readers are cautioned
not to place undue reliance on this measure.
Suncor's operating working interest before deduction of royalties and
without including any royalty interests of Suncor, in the
approximately 3.3 billion barrels of contingent resources associated
with the Fort Hills project in Alberta, is approximately 1.35 billion
barrels of bitumen.
In its Annual Information Form/Form 40-F, Suncor disclosed that the
reclassification of the contingent resources, which have an effective
date of December 31, 2012 for the Fort Hills project, was largely
contingent upon an assessment that development would be sanctioned
and commence within a reasonable time frame. Since the date of
Suncor's Annual Information Form, the respective co-owners of the
Fort Hills project have sanctioned the project. Given the foregoing,
these resources, or a portion thereof, may in the future be
re-classified as reserves.
Contingent resources are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from known
accumulations using established technology or technology under
development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. There is
no certainty that it will be commercially viable to produce the
There is no certainty as to timing of the development of the
resources. The contingent resource estimates are considered to be the
best estimate of the quantity of resources that will actually be
recovered. It is equally likely that the actual remaining quantities
recovered will be greater or less than the best estimate. The best
estimate of potentially recoverable volumes is prepared independent
of the risks associated with achieving commercial production. There
are numerous uncertainties inherent in estimating quantities and
quality of these contingent resources, including many factors beyond
our control. Contingencies may include factors such as economic,
legal, environmental, political and regulatory matters or lack of
infrastructure or markets.
For more information on contingent resources, please see Suncor's
most recent Annual Information Form/Form 40-F dated March 1, 2013
available at www.sedar.com and www.sec.gov.
Suncor Energy is Canada's leading integrated energy company. Suncor's
operations include oil sands development and upgrading, conventional
and offshore oil and gas production, petroleum refining, and product
marketing under the Petro-Canada brand. While working to responsibly
develop petroleum resources, Suncor is also developing a growing
renewable energy portfolio. Suncor's common shares (symbol: SU) are
listed on the Toronto and New York stock exchanges.
For more information about Suncor Energy please visit our web site at
suncor.com, follow us on Twitter @SuncorEnergy or read our blog,
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