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Suncor Increasing Spending on Oil Sands and Refining

1 December 2005

148_06_50
Suncor oil-sands plant

Suncor Energy, the No. 2 oil-sands producer in the world, will spend about C$3.5 billion ($2.98 billion) in 2006—a 30% increase over 2005—to boost its oil-sands output and to modify its Canadian and U.S. refineries.

Approximately C$2.5 billion (71%) of the budgeted spending is planned for Suncor’s oil-sands operations. Of this investment, about C$700 million is slated to be spent on sustaining capital with the remainder, approximately C$1.8 billion, earmarked for growth.

The company wants to boost its oil-sands production capacity to 350,000 barrels per day in 2008, while laying groundwork for further expansion later in the decade. The company estimates its current daily oil-sands production to be 260,000 barrels, with 11% of that being diesel, 45% sweet synthetic crude and 41% sour synthetic crude.

Suncor’s current plans call for all bitumen produced by the company to be upgraded to synthetic crude oil. However, Suncor-produced bitumen may be sold directly to other upgraders depending on certain market or operational conditions.

The company plans to spend C$350 million on its Canadian refining operations, mostly to modify a Sarnia, Ontario, refinery to meet environmental rules next year requiring lower sulfur emissions from diesel.

An estimated C$225 million will be spent to modify a Denver refinery to produce low-sulfur fuels and to process more oil-sands output. The project’s total bill has jumped 29% to C$465 million because of rising labor and equipment expenses, the company said.

Oil-sands operating costs next year are pegged at C$16 to C$16.75 a barrel including $1.50 a barrel for research and an insurance-like reserve, the company said. Operating costs averaged C$20.50 in the first nine months of this year when a fire reduced output by almost 50% and was $12 in 2004.

In its 2005 Sustainability Report released earlier this year, Suncor acknowledged the challenge that increasing oil-sands production will have on its greenhouse gas emissions. Although the greenhouse gas intensity—i.e., the emissions per unit of production—has decreased, the absolute emissions of GHG, as well as criteria pollutants, have risen sharply given the increases in production.

In 2004, Suncor’s gross GHG emissions were 10.4 million tonnes of carbon dioxide equivalent (CO2E)—79% of that from oil sands production. This 51% increase during a five-year period is primarily due to a 91% increase in total upstream and downstream production.

GHG emission intensity was 21.4% lower than 2000 levels and 31.5% lower than 1990 levels, owing to the introduction of new technologies and more efficient operating processes.

Suncor is exploring a variety of new schemes for the geological sequestration of its oil-sands CO2, including:

  • An industry/government experiment near Drayton Valley, Alberta, that will determine the cost and reliability of injecting CO2 into coal seams. This may also increase the production volumes of coalbed methane.

  • A study on piping oil-sands CO2 to distant oil or gas fields for injection

  • Through the Carbon Capture Project, exploring combining CO2 capture with coke gasification.

Suncor, although it currently mines its bitumen, is also investigating in-situ processing.

Suncor Sustainability Indicators
200020032004Δ 03–04
Total GHG Emissions (million tonnes CO2E) 6.88 8.86 10.39 +17%
Total GHG Intensity (tonnes CO2E/m3 total production) 0.481 0.441 0.378 -14%
SO2 Emissions (tonnes/day) 65.0 65.2 83.5 +28%
SO2 Intensity (kg/m3 total production) 1.66 1.18 1.11 -6%
NO2 Emissions (tonnes/day) 51.7 43.5 53.2 +22%
NO2 Intensity (kg/m3 total production) 1.32 0.79 0.71 -10%
Water withdrawal intensity (m3/m3 total production) 5.2 4.0 3.0 -25%
Water retained/used at oil sands (million m3) 12.0 54.5 46.8 -14%
Land reclaimed/Land disturbed at oil sands 9.0% 10.3% 8.9% -1.4 pp

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December 1, 2005 in Canada, Emissions, Oil sands | Permalink | Comments (1) | TrackBack (0)

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Comments

SUVs sales down almost 35%, does this mean that North American buyers atitude is changing? Will it last or swing with the price of gas? Higher gas tax may be required to maintain the price between $3 and $4 and have a lasting effect on the sale of gas guzzlers.

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