Total sells stake in Alberta oil sands project to Canada's Suncor

Tue Sep 22, 2015 8:40am EDT
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By Mike De Souza and Nia Williams

CALGARY, Alberta (Reuters) - French oil company Total, which is trimming exposure to Canada's oil sands amid a slump in crude prices, said on Monday it had sold a tenth of the Fort Hills oil sands project in northern Alberta to Canada's Suncor Energy.

The stake in the planned 180,000 barrel-per-day project was sold to Suncor for around C$310 million (US$233.96 million).

The sale, which is subject to regulatory approval and expected to close by the end of the year, will give Suncor a 50.8 percent stake in Fort Hills. Total will own a 29.2 percent in the project and a third partner, Teck Resources Ltd, owns 20 percent.

Suncor expects to spend an additional C$1 billion on Fort Hills as a result of the deal, including C$700 million in remaining project outlays.

The total C$15 billion cost of Fort Hills is estimated at a capital intensity of approximately $84,000 per flowing barrel of bitumen, according to Suncor. The project will start producing oil in the fourth quarter of 2017.

"We are acquiring an additional 10 percent of a C$15 billion project for C$1 billion," said Suncor spokeswoman Sneh Seetal.

Canada's oil sands are home to the world's third-largest crude reserves but carry some of the highest breakeven costs globally because of the scale of projects and energy-intensive production methods.

As global crude prices plummeted to around $46 a barrel from more than $100 a barrel in June 2014, operating costs have been squeezed up to 25 percent and producers have laid off thousands of workers.   Continued...

People walk past the entrance of French oil giant Total headquarters in the financial and business district of la Defense in Courbevoie near Paris October 21, 2014.  REUTERS/Charles Platiau