Teck adjusts plans for oil sands mine
GARY PARK For Petroleum News
Teck Resources, the diversified Canadian miner, has shuffled and delayed its timetable for its proposed 260,000 barrels per day Horizon oil sands mine, reinforcing the jitters among major developers in northern Alberta’s bitumen region.
In an updated file, Vancouver-based Teck told the Canadian Environmental Assessment Agency that the mine will now not start commercial operations until 2026, five years behind the original target and will be built in two stages, not four.
Adding to clouds hanging over Horizon, Teck has yet to make its final commitment to a mine that currently carries a price tag of C$20.6 billion.
It said the new timetable will incorporate project updates, but is dependent on regulatory approval, economic conditions and a sanctioning decision by the Teck board of directors.
Analyst — new construction unlikely Chris Cox, an analyst with Raymond James in Calgary, said the chances of construction starting on new oil sands mines in the current oil price outlook is “pretty unlikely, if at all.”
The only hope is a return to a US$100 price range, which no one is seriously touting at a time when the only sound from the oil sands is the door slamming on most big-ticket ventures as the industry forecasts a one-third drop in investment to C$23 billion this year.
Toronto-Dominion Bank economists say the downturn in capital spending has been “more swift and pronounced” than originally expected, slashing its outlook for the Alberta economy from the 0.5 percent growth it forecast in April to an 0.9 percent contraction.
Production growth Even so, the consulting firm of IHS CERA says oil sands production is expected to grow by 800,000 bpd over the next five years as projects under construction are pushed on to completion.
That list includes Fort Hills, a C$13.5 billion project operated by Suncor Energy at 40.8 percent, with France’s Total holding 39.2 percent and Teck at 20 percent. The mine is designed to introduce 180,000 bpd of new volumes when it comes on stream in late 2017.
Teck has committed about C$3 billion to Fort Hills, which is a stretch for a company being squeezed by the decline in coal and copper prices which have forced Teck to reduce its semi-annual dividend from 45 cents a share to 15 cents and triggered temporary shutdowns at six metallurgical coal mines in Western Canada.
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