Total, Suncor in $1.75 billion Canada oil sands deal

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 20 – Total E&P Canada Ltd. and Suncor Energy Inc. said they will form a strategic oil sands alliance encompassing the Suncor-operated Fort Hills mining project, the Total-operated Joslyn mining project, and the Suncor-operated Voyageur upgrader project.

All assets are in Alberta’s Athabasca region. Under the alliance, the companies will pool their combined interests in these projects, with the respective operator holding 51% and the other partner 49%. Total will pay Suncor $1.75 billion.

Total is acquiring 19.2% of Suncor’s interest in the Fort Hills project, giving it an overall 39.2% interest after its acquisition of UTS Energy Corp, finalized in October 2010. Suncor, as operator, will hold 40.8%, while Teck Resources Ltd. holds 20%.
Suncor is acquiring 36.75% of Total’s interest in the Joslyn project, operated by Total with a 38.25% stake along with Occidental Petroleum holding 15% and Inpex 10%.

Total also is acquiring a 49% stake in the Suncor-operated Voyageur upgrader project near Fort McMurray. The facility will have a capacity of 200,000 b/d of upgraded products and will process Total’s Fort Hills and Joslyn bitumen production. Construction, suspended in 2008, will resume when the front-end engineering design is updated in 2011.

Suncor and Total agreed to develop Fort Hills and Voyageur in parallel so that both come on stream early 2016. Engineering and procurement contracts for the projects are expected to be awarded in 2011.

Both companies confirmed a Joslyn North Mine timetable calling for production of 100,000 b/d in 2017-2018, subject to receiving the necessary permits.

Suncor unveiled a 10-year growth strategy including plans to increase oil production to more than 1 million boe/d by 2020. Over 10 years, Suncor said it is targeting oil sands production growth of 10%/year and companywide production growth of 8%/year. Key components of the plan include continued development of the Firebag in-situ project and development of the MacKay River in-situ project.

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