Estimated Cost of Fort Hills Oil Sands Project Jumps 50%

17 September 2008

The estimated cost of the Fort Hills oil sands project (earlier post) has jumped 50% since the partners first approved the design basis in June 2007.

The partners—Petro-Canada, UTS Energy Corp. and Teck Cominco Ltd.—originally said in June 2007 that the cost for the Fort Hills Project (FHP) would be about C$33 billion (US$30.7 billion). The major increases are costs associated with construction materials, labor, project management and engineering.

FHP is an integrated oil sands mining project that includes a mine and bitumen extraction plant 90 kilometers north of Fort McMurray, Alberta and an upgrader in Sturgeon County northeast of Edmonton, Alberta. FHP is expected to produce up to a total of 280,000 bpd of synthetic crude oil by 2015, once all phases are complete.

The Fort Hills Partners are discussing options for development of the Project, including the phasing of various aspects of the Project. Selected options are expected to be reflected in the final FEED outcome. Once FEED work is complete, Fort Hills will develop a definitive cost estimate, which will be the basis for the final investment decision planned by the Fort Hills Partners for the fourth quarter of 2008.