Suncor, Total May Not Proceed With New Oil-Sands Mines

Date : 07/25/2012 @ 11:51AM
Source : Dow Jones News
Stock : Occidental Petroleum Corp. (OXY)
Quote : 61.56  0.0 (0.00%) @ 5:55AM

Suncor, Total May Not Proceed With New Oil-Sands Mines

Suncor (NYSE:SU)
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     By Edward Welsch 
 

CALGARY, Alberta--Suncor Energy Inc. (SU) said Wednesday a shift in oil-production trends in North America has it reviewing the business case for constructing two new oil-sands mines and an upgrader with French energy giant Total SA (TOT).

"In principle there is the opportunity not to progress" the Joslyn and Fort Hills oil-sands mines and the Voyageur upgrader, Suncor Chief Executive Steve Williams said on a conference call with investors.

"We're reviewing the scope and we're looking at the profitability of those projects as we speak," he said.

The Joslyn mine is expected to cost between 7 billion Canadian dollars (US$6.86 billion) and C$9 billion to build.

Mr. Williams said the amount of new light oil produced in North America - from reservoirs such as the Bakken in North Dakota and Saskatchewan and new shale-oil reservoirs in the U.S. - had changed the market for the upgraded light oil that the projects with Total would produce.

"The continental balance has changed," Mr. Williams said. "So if you look at when we approved that project a number of years ago, the mid-continent light, sweet crudes weren't being produced," he said.

Suncor owns a 36.75% stake in the Joslyn mine, which is expected to produce 100,000 barrels a day as soon as 2017, with Total holding a 38.25% stake, Occidental Petroleum Corp. (OXY) holding a 15% stake and Inpex Corp. (1605.TK) holding a 10% stake.

Suncor owns a 40.8% stake in the Fort Hills mine, which could produce up to 160,000 barrels a day starting in 2016. Total owns 39.2% of the project and Teck Resources Ltd. (TCK) owns 20%.

Write to Edward Welsch at edward.welsch@dowjones.com

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