ALBERTA - The Fort Hills Energy LP has selected the main parameters for its oil sands development 90 km north of Fort McMurray. The partnership (PETRO-CANADA 55%, TECK COMINCO 30% and UTS ENERGY 15%) will build an integrated oil sands mining project on leases in the Athabasca Basin, plus an upgrader in Sturgeon County, northeast of Edmonton.
The first phase of the project is planned to produce 140,000 bbl/d of synthetic crude oil. Associated bitumen production is expected to be about 160,000 bbl/d. First bitumen production is expected to begin in the fourth quarter of 2011 with first synthetic crude oil production from the Sturgeon upgrader anticipated in the second quarter of 2012.
The preliminary capital cost estimate for the mine and upgrading components of the first phase of Fort Hills is $14.1 billion (as spent dollars including escalation). This cost does not include front-end engineering and design or third-party capital.
The Fort Hills project is expected to be developed in two phases, with the second phase doubling the phase one capacity to produce up to a total of 280,000 bbl/d of synthetic crude oil by 2014. The preliminary capital cost for the mine and upgrading components of the second phase of the project is estimated at $12.1 billion. This cost also omits front-end engineering and design or third-party capital.
(Editors note - In March 2006 when CMJ spoke with Teck Cominco about the Fort Hills project, the company thought the phase one price tag would be in the neighbourhood of $10.0 billion, and if the project went to phase two, another $10.0 billion would be invested. The higher costs recently revealed are a consequence of tight labour markets and the escalating cost of materials. - M.S.)