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Suncor writes down ‘challenged’ upgrader

Suncor Energy has written down most of the carrying value of the planned Voyageur upgrader near Fort McMurray, Alta., describing the project as “challenged.”

The company, operator of the Voyageur project in partnership with Total E&P Canada, took a $1.487 billion net after-tax impairment against fourth-quarter 2012 earnings.

The charge resulted in a fourth-quarter loss for the company of $562 million, compared to a $2.65 billion profit in the fourth quarter of 2011. After the writedown, the carrying value of net assets related to Suncor’s Voyageur interest as of Dec. 31 was about $345 million.

The Voyageur upgrader is to handle bitumen from the planned Fort Hills oil sands mine operated by Suncor and Joslyn mine operated by Total E&P Canada. It is to be able to process 296,000 b/d of bitumen and yield 218,000 b/d of synthetic crude oil, according to a project description on Total E&P Canada’s web site.

The companies formed a joint venture in 2010 to share interests in the mines and upgrader and to develop the Fort Hills and Voyageur projects in parallel (OGJ Online, Dec. 20, 2010).

“Suncor's view is that the economic outlook for the Voyageur upgrader project is challenged,” Suncor said in its fourth-quarter earnings release. Suncor and Total, it said, have been considering options for the upgrader, “including the implications of cancellation or indefinite deferral.”

Suncor said the partners hope to make a decision by the end of the first quarter. It noted that the project can’t proceed without the approval of both partners, which “have agreed to minimize expenditures on the project pending a decision.”

Total E&P Canada’s parent, Total, hasn’t yet reported fourth-quarter results. 


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