Suncor approves C$3.6 billion in funding for next phase of oil sands growth

Petroleum News

Oil sands powerhouse Suncor Energy gave its final stamp of approval Nov. 16 to a C$3.6 billion expansion designed to help boost its Alberta oil sands production to 350,000 barrels per day by 2008. The company also set its capital budget for 2005 at C$2.5 billion, a 47 percent increase over 2004.

The C$3.6 billion figure — $600 million more than Suncor’s initial estimate — includes C$2.1 billion for upgrader expansion and new coking facilities, and C$1.5 billion to boost bitumen production at the company’s in-situ and mining and extraction facilities. Bitumen from third parties is also expected to supply the expanded upgrader.

Final Board approval “for some components of the bitumen production plan are still pending,” Suncor said in a Nov. 17 press release.

Engineering for the project is approximately 50 percent complete, Suncor said. Preliminary fieldwork, foundation construction and the manufacture of major vessels and equipment are in progress.

“Increased oil sands production is central to our long-term strategy,” said Rick George, Suncor president and chief executive officer. “With our staged approach to growth, we expect to expand production steadily, reliably and at a competitive cost.”

This project, as well as other expansion projects currently being undertaken by Suncor, are key components of the company’s Voyageur growth strategy — a multiphase plan to increase production to more than a half million barrels per day in the 2010 to 2012 time frame.

Included in Suncor’s C$1.5 billion capital spending budget for 2005 are C$1.5 billion to support oil sands development and C$400 million for Canadian downstream operations, with the majority directed toward meeting federal regulations for diesel desulphurization at the company’s Sarnia refinery, the company said.

Funds will also be spent to expand the refinery’s throughput capacity and enable it to process approximately 40,000 barrels per day of oil sands sour crude blends.

Also included in the capital budget is C$535 for Suncor’s U.S. operations.