ray - syncrude producers. Suncor & Syncrude Canada
A quicksearch using "syncrude producers" at storm.ca tossed up the following article. It's dated but does give you a start if you're pursuing anything.......
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Oil Daily
Nov 10, 1998
Canadian Synthetic Crude Projects Proceed Apace Despite Current Depressed Oil Prices.
With oil prices still in the doldrums, it's natural to assume that synthetic crude developments -- converting bitumen to a more respectable oil -- would have been pushed to the back burner.
Not so: Canada's oil sands producers are still forging ahead with multibillion-dollar projects, claiming that their economics remain sound. Similar schemes in Venezuela are also advancing, but have encountered problems with cost overruns and debt finance, with new developments postponed.
Canada's two existing syncrude producers near Fort McMurray in northern Alberta plan to expand capacity by almost 350,000 b/d in coming years, while two grass-roots projects would add up to 250,000 b/d more.
The extra volumes could prove valuable in protecting Canada's position in the fiercely competitive U.S. market. Canadian exports of 1.248 million b/d to its southern neighbor in the first eight months of this year put it in fourth place, behind Saudi Arabia, Venezuela and Mexico.
Suncor Energy has just opened its Steepbank Mine, which will provide bitumen feedstock for its Project Millennium expansion.
Suncor's syncrude production has already risen to 105,000 b/d from 85,000 b/d through debottlenecking in the past year. It hopes to complete regulatory procedures in the first quarter of 1999 -- a provincial hearing is due in January -- and then to steam ahead with construction.
Production should jump to 210,000 b/d on completion in 2002. Total investment is put at around US$2.5 billion.
The Canadian Bond Rating Service (CBRS) cut Suncor's credit outlook from "stable" to "negative" at the end of last month, citing "continuing low oil prices, a rise in debt leverage and the large capital expenditures required to complete its oil sands plant expansion."
But CBRS stresses that oil sands operations remain profitable in the current climate, and it still expects the expansion to go ahead. Creeping capacity increases will provide extra flow, and Suncor has already arranged an $850 million credit. "The only factor is that, if prices remain depressed, they may have to take steps to raise more finance," a CBRS analyst said.
Syncrude Canada -- a venture including Exxon Corp. affiliate Imperial Oil, Petro-Canada, AEC, Canadian Occidental and others -- will spend a whopping $4 billion to expand its 205,000 b/d capacity in stages to 425,000 b/d over the next seven years. A first stage -- debottlenecking the North Mine -- is due to be finished next year.
Syncrude says financing is the responsibility of partners, but expects "pretty well all" of the cost to be met by cash flow.
Neither company appears deterred by low oil prices, arguing that its figures make sense. Suncor even claims that it will become "one of the lowest-cost producers of crude oil" in North America.
This might seem unlikely, given that the process is based on digging bitumen mixed with sand out of the ground. But producers have been helped by technical advances this decade, especially a switch from monolithic bucket and wheel structures to the more flexible truck and shovel method.
They are also aided by the high quality of syncrude, which commands a premium to U.S. benchmark West Texas Intermediate, custom blending for refiners, and changes in the fiscal regime.
But the key is the huge size of reserves -- Suncor could have some 3.8 billion bbl, enough for 50 years at its expanded rate -- which cuts finding and development (F&D) costs to a bare minimum.
Suncor's cash costs for operations and maintenance are now around $8.50/bbl, and should fall below $7/bbl through the expansion. Syncrude's costs are slightly higher, at $9/bbl, but are projected to drop as low as $6/bbl.
Current oil prices give the syncrude producers a netback of around $6/bbl, most of which is a profit margin. Conventional crude oil producers in North America get a higher netback -- perhaps $9/bbl -- but spend about $5/bbl on F&D.
Analysts wonder if new Canadian syncrude projects planned by the Canadian arms of Royal Dutch/Shell Group and Mobil Corp. will proceed.
Shell plans to pipe 150,000 b/d of bitumen mixed with solvent to an upgrader at its existing 100,000 b/d refinery near Edmonton. Analysts expect around 75,000 b/d of the syncrude to be processed at the refinery into high-quality products.
The scheme's $2.5 billion price-tag reflects the lack of existing infrastructure, but Shell says benchmarking studies show it can "meet or exceed" competitors' costs. The aim is to clear regulatory hurdles in the first quarter and secure corporate approval soon after, allowing completion in 2002.
Mobil's $1.7 billion scheme involves producing 100,000 b/d of syncrude beginning in 2003, but it is less advanced. Like others, Mobil insists that low oil prices won't affect the project's viability. The company hopes to submit a development plan to regulators in the second quarter of 1999, and then to approve investment in mid-2000. The lease contains at least 1.5 billion bbl of recoverable bitumen, enough for a 32-year scheme.
But some analysts suspect Mobil was spurred into announcing development plans by the threat of lease expiration.
Others are viewing the sector with interest: France's Total S.A. opened an office in Calgary in September to scout out opportunities. The company is considering pumping extra-heavy oil with thermal stimulation, rather than venture into mining. Total pulled out of its conventional oil business in Canada five years ago.
Both Mobil and Total are already involved in syncrude developments in Venezuela, in partnership with state Petroleos de Venezuela S.A. "There are these two huge reserves sitting in the Western Hemisphere and in between is the U.S. market," said Total's Calgary business director, Bob Skinner.
David Pike
Thursday's edition of The Oil Daily will include a focus on syncrude developments in Venezuela. |
