Syncrude makes $713 million in Q1

Syncrude Canadas newest coker may have gotten off to a rocky start, but overall, the expansion of the Fort McMurray-area oilsands project has resulted in a huge gain in earnings for the company for the first quarter.

Based on the financial results of Canadian Oil Sands Trust, (COS.UN – T) the biggest joint-venture partner of the project, Syncrude raked in $713 million compared to about $256 million during the same period in 2006.

Even still, the company gauged it would produce slightly more than 26.6 million barrels of crude oil during the first quarter, a number which has risen from 18.4 million barrels last year.

The daily production average during the first quarter was 296,000 barrels per day (bpd) compared to 205,000 bpd in 2006.

The company blamed the shortfall in production on coker problems. A coker is a vessel where bitumen, the black, asphalt-like oil that comprises up to 18% of the oilsands, is cracked into its fractions. Coke is extracted from the coker to start the process of converting bitumen to upgraded crude oil.

Coker 8-2 required extra maintenance, which began in early December and finished in late January.

More of a surprise was coker 8-3, which came on line with a major expansion last August and increased Syncrudes capacity by 100,000 bpd to 350,000 bpd. The new coker has been operating at 70% of its capacity. The company has scheduled maintenance for coker 8-3 during the second quarter to remove coke residue build-up inside the vessel.

Coker 8-3 was offset by higher output from both Cokers 8-1 and 8-2 in March. The average production for the month was 356,000 bpd.

Maintenance is scheduled for Coker 8-3 in May to remove coke residue build-up within the vessel. Syncrude did not foresee doing maintenance so soon, but noted that various performance issues are normal with major expansions.

Operating costs for the project were down significantly due too less turnaround and maintenance work, allowing production to rise and per-barrel costs to drop. In the first quarter, operating costs were $23.56 per barrel compared to $40.26 per barrel in 2006.

Canadian Oil Sands Trust has the biggest stake in the project with a 36.74% ownership, followed by Imperial Oil Resources at 25%, Petro-Canada Oil and Gas with 12%, ConocoPhillips Oilsands Partnership II with 9.03%, Nexen Oil Sands Partnership with 7.23%, Mocal Energy with 5% and Murphy Oil also with 5%.

Syncrude Canada is the operator of the project, which consist of oilsands mines and an upgrading facility that produces a light, sweet crude oil. Syncrudess final product is sent by pipeline to three Edmonton-area refineries and to pipeline terminals, which ship it to refineries in Canada and the United States.