Engineering & Mining Journal

JUL 2019

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Page 23 of 67

OIL SANDS 22 E&MJ • JULY 2019 fore resuming them late in the quarter. "[We] will continue to evaluate future movements as economically justified," Kruger commented. The company also announced a slow- down in the development of its Aspen in-situ mining project, which it said was a direct result of "market uncertainty stem- ming from the government of Alberta's intervention in crude markets and other 'industry competitiveness challenges.'" "Imperial's view remains that free markets work, and intervention sends a negative message to investors about doing business in Alberta and Canada," the company said in a press release an- nouncing the changes at Aspen in March. "The company remains concerned about the unintended consequences of the government's decision to manipulate prices, including the negative impact on rail economics." Imperial sanctioned development of the C$2.6 billion Aspen project in No- vember 2018, prior to the curtailment policy's announcement and implemen- tation. The project is expected to em- ploy 700 people during construction, create 200 permanent jobs and produce 75,000 bbl/d of oil. Based on preliminary estimates and tax and royalty rates at the time of the halt, Imperial said the project could deliver more than C$4 billion in di- rect federal and provincial tax revenues and C$10 billion in royalties for Alberta over its projected life. The slowdown in project execution is expected to delay delivery by at least a year. "This was a difficult choice in light of our final investment decision on Aspen," said Kruger. "However, we cannot invest billions of dollars on behalf of our share- holders given the uncertainty in the cur- rent business environment. That said, our goal is to ensure the work we do this year will enable us to effectively and efficient- ly resume planned activity levels when the time is right." Fort Hills Forges Ahead Suncor meanwhile got creative with its first quarter production strategy and al- located a portion of its mandated bitu- men limit to Syncrude to help boost its upgrader utilization to 90% compared to 71% in the previous year quarter. Sun- cor is Syncrude's majority owner and the company increased its shares in February 2018 by 5% to 58.74%. The remaining shares are held by Imperial, CNOOC Oil Sands Canada and Sinopec. Suncor recorded 657,200 bbl/d of oil sands production in the first quarter of 2019 compared to 571,700 bbl/d in the prior-year quarter. The company said increased production from the ramp up at Fort Hills and improved Syncrude asset utilization more than offset the impact of mandatory production curtailments. "Suncor's integrated model has con- sistently generated positive results through changing market conditions, in- cluding mandatory production curtail- ments in Alberta, and the first quarter of 2019 was no different," said Mark Little, president and chief operating officer, in Suncor's first-quarter report. "Funds from operations increased to C$2.6 billion in the first quarter of 2019 as we continue to execute on our long - term strategy." Suncor is also the majority owner of the Fort Hills project with a 54% share, with the remaining shares split between Total (24.5%) and Teck (21.31%). The mine has two open pits and a fleet capa- ble of producing 14,500t/h, or 194,000 bbl/d, of oil sand at full capacity. Fort Hills began production in Janu- ary 2018, achieving commercial levels in June last year and, according to Teck's 2019 first-quarter report, the operation has performed well during startup and commissioning. The project was deliv- ered just four weeks after its projected date and, given the delays resulting from severe wildfires in Fort McMurray during construction, this was no mean feat. Teck said there is also further poten- tial to de-bottleneck and expand produc- tion capacity. "Evaluation of de-bottlenecking op- portunities will include near-term work with minimal to no capital. Long-term opportunities that may require modest capital expenditure will also be investigat- ed. Between the near-term and long-term opportunities, there is the potential to in- crease Fort Hills' production by 20,000 to 40,000 bbl/d of bitumen on a 100% basis over the medium-term. Our share of annu- al bitumen production could increase from 14 million barrels to approximately 15.5- 17 million barrels," the company said. The regulatory application review of Teck's Frontier project also continued with a public hearing before a joint fed - eral/provincial panel that concluded in December 2018. Frontier is a proposed 260,000-bbl/d truck-and-shovel opera- tion located between Fort McMurray and Fort Chipewyan in northeast Alberta. The project is currently advancing through a joint federal-provincial regulatory review process, and Teck said the earliest a de- cision statement could be expected is the first quarter of 2020. A hydraulic shovel places overburden in a haul truck at the Fort Hills site. (Photo: Suncor Energy Inc.)

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