Design Basis Announced for Fort Hills Project
Petro-Canada, on behalf of the Fort Hills Energy L.P., has announced the formal design basis for its Fort Hills Project - an integrated oil sands mining project that includes a mine and bitumen extraction plant 90 kilometres north of Fort McMurray, Alberta and an upgrader in Sturgeon County northeast of Edmonton, Alberta. This milestone marks the partnership's commitment to proceed with the front-end engineering and design (FEED) stage. The FEED process will take about 12 months to complete, producing a definitive cost estimate and the basis upon which the final go-ahead decision on the project will be made.
The first phase of the project is planned to produce 140,000 barrels per day (b/d) of synthetic crude oil. Associated bitumen production is expected to be about 160,000 b/d. First bitumen production is expected to begin in the fourth quarter of 2011 with first synthetic crude oil production from the Sturgeon Upgrader anticipated in the second quarter of 2012. The preliminary capital cost estimate for the mine and upgrading components of the first phase of Fort Hills is $14.1 billion.
"This marks a key milestone and a big step forward on the Fort Hills project," said Ron Brenneman, Petro-Canada's Chief Executive Officer and President. "The size, staging and technology chosen should provide solid financial returns while minimizing execution risk. This step puts us on a path for a final go-ahead project decision in the third quarter of 2008, following the anticipated regulatory approval of the Sturgeon Upgrader."
The Fort Hills project is expected to produce up to a total of 280,000 b/d of synthetic crude oil by 2015, once all phases are complete.
Fort Hills Energy L.P. consists of Petro-Canada with a 55% working interest, UTS Energy Corporation with a 30% working interest and Teck Cominco Limited with a 15% working interest, with Petro-Canada Oil Sands Inc., a wholly owned subsidiary of Petro-Canada, as the contract operator for the project.
The Fort Hills mine received regulatory approval in 2002 from Alberta Environment and the Alberta Energy and Utilities Board. The Fort Hills partnership filed the commercial application and environmental impact assessment for the Sturgeon Upgrader with provincial regulators in December 2006.
UTS Energy Corporation is focused on growing and developing oil sands assets, with a market capitalization of approximately $2.5 billion. The company was instrumental in re-establishing the Fort Hills Oil Sands Project and is the principal founder of the Fort Hills Energy Partnership. Based in Calgary, Alberta, the company's common shares are traded on the Toronto Stock Exchange under the symbol UTS.
Teck Cominco Limited is a diversified mining company, headquartered in Vancouver, Canada. Its shares are listed on the Toronto Stock Exchange under the symbols TCK.A and TCK.B and on the New York Stock Exchange under the symbol TCK. The company is a world leader in the production of zinc and metallurgical coal and is also a significant producer of copper, gold, indium and other specialty metals.
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