Canada's largest energy company says the project's total cost — shared between Suncor and partners Total E&P Canada Ltd. and Teck Resources Ltd. — is now $13.5 billion. That amounts to about $84,000 per flowing barrel of bitumen and is in-line with similar oilsands projects that have been built recently, Suncor said.
"The Fort Hills economics are positive," said CEO Steve 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."
Fort Hills, which has been shelved since the onset of the 2008 financial crisis, is expected to start producing oil in late 2017, at the earliest, ramping up to its full capacity of 180,000 barrels per day within 12 months.
It's expected to account for about 15 per cent of Suncor's total capital budget on average per year.
Also Wednesday, pipeline giant Enbridge Inc. (TSX:ENB) announced it plans to build a $1.6-billion pipeline to bring crude from Fort Hills and other Suncor oilsands projects to its hub in Hardisty, Alta. The Wood Buffalo Extension Pipeline will carry some 490,000 barrels of diluted bitumen per day.
Enbridge is also moving ahead with plans to build a $1.4-billion pipeline to bring diluent — a lighter petroleum product used to thin-out bitumen so that it can flow through pipelines — from Edmonton to the oilsands region. Fort Hills and other Suncor oilsands projects will anchor the Norlite project, but Enbridge said it will be seeking long-term commitments from other potential customers as well. Norlite is expected to have a capacity of 270,000 barrels per day, expandable to 400,000.
In its earlier iteration, Fort Hills was a joint-venture between Petro-Canada, UTS Energy and Teck (TSX:TCK.B). Petro-Canada was acquired by Suncor in mid-2009 and UTS was acquired by French energy giant Total a year later.
Fort Hills, about 90 kilometres north of Fort McMurray, Alta., has best estimate contingent resources of 3.3 billion barrels of bitumen. The mine's life is expected to be 50 years.
"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 Williams.
"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."
Earlier this year, Suncor scrapped its Voyageur upgrader, which was also part of a joint-venture with Total. It decided it wasn't economically feasible to invest in a multibillion-dollar complex to process the oilsands bitumen into a lighter crude refineries can handle, when huge volumes of light crude are flowing out of North Dakota and other U.S. regions.
The fate of the Joslyn oilsands mine, another Suncor-Total joint venture, has yet to be decided.
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