Teck, Suncor up cost of Fort Hills oil sands project
Canada's largest diversified miner Teck Resources (TSX:TECK.A and TECK.B)(NYSE: TECK) has revealed that its Fort Hills oil sands project could cost up to $1.9 billion more than what it originally anticipated.
The Vancouver-based company now expects its share of the project to cost $805 million, or about 10% more than forecast, and as a result the miner will record an after-tax impairment charge of $164 million in its fourth quarter results.
As a result, Teck will record an after-tax impairment charge of $164 million in its fourth quarter results.
According to Teck’s partner in the venture, Suncor Energy (TSX:SU), the cost increase was caused by last year’s devastating wildfires in Fort McMurray, along with construction changes to boost capacity.
The cost per barrel, however, will remain at about $84,000 per flowing barrel of bitumen because nameplate capacity has been increased to 194,000 barrels per day from 180,000 bpd, Suncor said while delivering fourth quarter results.
The company, Canada's largest energy firm, added that its share of Fort Hills' remaining project capital was between $1.6 billion and $1.8 billion and most of that would be spent this year, with production expected to gradually ramp up through 2018.
"Bringing our key major growth projects, Fort Hills and Hebron, to first oil by the end of this year continues to be a top strategic priority for us," Suncor chief executive officer, Steve Williams, said in the statement.
Both Teck and Suncor said the project was 76% complete as of Dec. 31 and that it remains on track to produce first oil in late 2017.