Fort Hills oilsands trio initiates design plan

Vancouver – Partners in the Fort Hills Oilsands project, located in northern Alberta’s Athabasca region and about 90 km north of Fort McMurray, are moving forward with initial design plans looking to bring the operation to the 140,000-barrel-per-day level of synthetic crude oil (SCO) production by late-2011.

Petro-Canada (PCA-T), with 55%-interest, Teck Cominco (TCK.B-T, TCK-N), holding a 15% working interest, and UTS Energy (UTS-T, UEYCF-O), with its 30%, have all okayed plans to proceed with the front-end engineering and design (FEED) stage at Fort Hills over the next 12 months.

The FEED process will table a definitive cost estimate for the project, on which a final go-ahead decision will be based. Preliminary capital cost estimates for the mine and bitumen upgrader in the first phase is about $14.1 billion.

A second phase, doubling SCO production capacity to the 280,000-barrel-per-day level by 2014, is anticipated to cost a further $12.1 billion.

Teck Cominco initially became involved in the Fort Hills Energy Limited Partnership in 2005 through a $475 million subscription commitment. Its subscription price will account for just over half of its required 34% contribution ($850 million) to project expenditures until spending reaches $2.5 billion. Once that threshold is reached the partners will fund project costs proportional to interest levels.

A late-2006 resource estimate of contingent SCO within the Fort Hills partnership tabled approximately 4.7 billion barrels of contained SCO. Average diluted bitumen grade associated with the ore volumes is estimated to be about 11% by weight.