OIL SANDS: Teck pushes Frontier start-up to 2026

ALBERTA – Vancouver's Teck Resources may be most famous for its base metals and coal production, but for several years now the company has had its toe in the waters of the oil sands. It is a 20% partner in the Fort Hills project where...

ALBERTA – Vancouver's Teck Resources may be most famous for its base metals and coal production, but for several years now the company has had its toe in the waters of the oil sands. It is a 20% partner in the Fort Hills project where production is expected as early as the fourth quarter of 2017.

Teck is also the owner and operator of the Frontier oil sands project 110 km north of Fort McMurray. The $20.6-billion project will have an ultimate output of 260,000 bbl/d of bitumen, but the start-up date has been pushed back to 2026, five years later than previously projected.

The obvious reason for the delay is that the bottom dropped out of the oil market last year, falling to below US$50 a barrel from more than US$110. Today crude oil trades at a bit under $60 a barrel. Analysts who purport to know what the oil price is going to do are not predicting that it will be much higher by year end.

Another reason to delay the start the Frontier project is that Teck and Shell Canada are working out some land holding issues. The footprints of Frontier and Shell's Pierre River oil sands project overlap, and the companies recently worked out a compromise by swapping some leases. The deal is intended to improve the economics and efficiency of both multi-billion projects.

Teck informed the Alberta Energy Regulator in a letter dated June 15, 2015, that the Frontier project timeline will be slowed. Now construction is scheduled to begin in 2019 with phase 1 oil production beginning in 2026. Phase 2 will come online in 2037. The open pit mine will operate for 41 years (until 2066), and closure is expected in 2081 when reclamation is done and the pit lakes are safe to discharge into the natural watershed.

Click here to read the newsletters about the Frontier project.

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