Suncor, Petro-Canada Merger Likely To Cut Fort Hills Costs
23 Marzo 2009 - 8:52AM
Noticias Dow Jones
The merger between Suncor Energy Inc. (SU) and Petro-Canada
(PCZ) will likely push down costs for the delayed Fort Hills oil
sands project, Petro-Canada chief executive Ron Brenneman said
Monday.
He also hinted that the project's oil sands upgrader - which is
currently on hold - could be canceled altogether, choosing to
process the sludgy oil sands bitumen through Suncor's upgrading
facilities instead.
Late last year, Petro-Canada and project partners UTS Energy
Corp. (UTS.T) and Teck Cominco Ltd. (TCK) delayed the integrated
oil sands development in northern Alberta after costs spiked more
than 50% to top C$28 billion.
New projects generally have higher costs than expanding existing
developments, as they need to build all new infrastructure and
support facilities from scratch. With the merger, Brenneman said,
the first 160,000-barrel-a-day Fort Hills development will be able
to take advantage of Suncor's existing oil sands
infrastructure.
"We would expect, because this project is now part of a
portfolio of oil sands projects...we could see capital intensity
more akin to the second phase of the project," Brenneman said on a
conference call.
The second phase of Fort Hills was estimated at C$12.1 billion
in mid-2007, and hasn't been updated.
The merger also increases the likelihood that the Fort Hills
upgrader will be canceled, which accounts for a major chunk of the
project costs. An upgrader processes oil sands bitumen into a
lighter crude that is more easily handled by refineries.
As part of discussions with the Alberta government around
developing the Fort Hills lease, Petro-Canada can proceed with the
project "without any obligation" to upgrade the resulting bitumen
in Alberta, Brenneman said.
The company has made a commitment to upgrade bitumen from a
second project phase, but this doesn't mean Petro-Canada has to
build an upgrader, he added.
Suncor already has two upgraders and is planning a third as part
of its delayed Voyageur development.
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669;
hyunyoung.lee@dowjones.com