Officials at Teck Resources Ltd. have announced a joint effort with Suncor Energy and Total E&P Canada, a unit of French oil giant Total S.A., to construct the Fort Hills oil sands project in northern Alberta with an estimated 3.3 billion barrel bitumen resource.
With a mine life expected to exceed 50 years, “Fort Hills is one of the best undeveloped assets in the Athabasca region and a natural fit with our business strategy,” said Teck CEO Don Lindsay.
In addition to Teck’s 20% stake, while Suncor and Total E&P Canada will have 40.8% and 39.2% interests, respectively, Suncor will develop and operate of the project under a services contract.
Fort Hills lies 90 km north of Fort McMurray and is slated to produce first oil by Q4 2017 and achieve 90% of planned production capacity of 180,000 barrels per day (b/d) of bitumen 12 months after. Teck’s production share is expected at 36,000 b/d (or 13 million barrels per year) of bitumen.
Based on Suncor’s project cost estimates, Teck’s portion of the fully escalated capital investment in Fort Hills from date of project sanction is estimated at $2.94 billion between 2014 and 2017, including remaining earn-in commitments of $240 million.
Gross overall project costs for all partners since project restart in 2011 are estimated at about $84,000 per flowing barrel of bitumen, within the range of similar recent oil sands projects.