December 14, 2011 at 12:19 pm #2016
Canadian Oil Sands to spend $1.46 billion at Syncrude oil project in 2012
By Lauren Krugel, The Canadian Press | The Canadian Press Thu, 8 Dec, 2011 1:08 PM EST
CALGARY – Canadian Oil Sands Ltd. said Thursday its share of spending on the Syncrude oilsands project will more than double in 2012 and that output from the sprawling mine in northern Alberta will increase.
The Calgary-based company, which owns a 37 per cent stake in the world’s largest oilsands mine, has set a capital budget for next year of $1.46-billion, up from this year’s expected $691 million.
Output is targeted at between 106 and 117 million barrels in 2012, up from this year’s projected range of 105 to 107 million barrels.About $974 million of next year’s budget will be used to build infrastructure that will improve efficiency and environmental performance at the mine for the next 10 to 20 years, the company said.
“Syncrude’s focus remains on improving capacity utilization, which offers the best opportunity to add significant value in the near term,” CEO Marcel Coutu said in a statement.
Last month, a disruption at one of the Syncrude upgrader’s coking units reduced output by about 100,000 per day. A coker breaks down heavier crude into lighter oils, gases, and petroleum coke and is an important step in the upgrading process. The synthetic crude oil that comes out of the upgrader can then be refined into products like gasoline and diesel.
Earlier this week, Canadian Oil Sands said it has the upgrader running at about two-thirds of normal capacity.
Coutu said the company is “disappointed with the pace of utilization improvement,” but efforts by ExxonMobil and its Canadian subsidiary Imperial Oil Ltd., which operate the project, should make production rates more predictable and robust over the long-term.
The Syncrude owners which also include Nexen Inc., Suncor Energy Inc., China’s Sinopec, Mocal Energy Ltd. and Murphy Oil Co. Ltd. back a view expressed last month by Imperial that expansions won’t take place at Syncrude until after 2020, according to the Canadian Oil Sands release.
In February, Canadian Oil Sands announced a preliminary plan to bring Syncrude production to 425,000 barrels of synthetic crude per day by 2020, up from the current capacity of 350,000.
Raw bitumen production was set to rise to 600,000 by the end of the decade as two new 100,000-barrel-per day mine trains began operating by 2020.That view has changed, as the companies look to improve the reliability of the existing operations and boost output through smaller projects to remove bottlenecks.
“Syncrude’s owners remain focused on profitably growing production over the long-term, and delaying expansion to enable Syncrude time to scope and develop execution plans to better control risk should provide the most robust economics,” the company stated.
“In the meantime, Syncrude’s large existing asset base should continue to generate substantial cash flow.”
The company intends to maintain its dividend at its current level of 30 cents per share.
Canadian Oil Sands shares fell 1.3 per cent, or 27 cents, to $20.08 in afternoon trading on the Toronto Stock Exchange.
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