Teck delays high-cost Canada oil sands project

Fri Jul 10, 2015 10:44am EDT
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By Susan Taylor

TORONTO, July 10 (Reuters) - Teck Resources Ltd is delaying development of its massive, high-cost Frontier oil sands project in northern Alberta by five years at a time when oil prices show few signs of recovering from current depressed levels.

The Vancouver-based mining company said in an update filed with regulators that it now expects first oil from the multibillion-dollar Western Canadian project in the first quarter of 2026, rather than in 2021 as previously planned.

Construction of the 260,000 barrel-a-day bitumen mine is planned to start in 2019 and occur in two phases, rather than four, to take advantage of economies of scale, the filing with the Canadian Environmental Agency said.

Production from a second phase is expected in 2037 with mining complete in 2066.

Teck now expects the project to produce 3 billion barrels of bitumen, up from 2.8 billion, reflecting an expanded resource. Capital costs are down to C$20.6 billion ($16.18 billion), from C$22.9 billion, on optimized engineering and increased production, the diversified miner said.

It extended its estimates of the mine's life to 41 years, from 2026 to 2066, up from 37 years.

Teck initially applied in 2011 for approval of the mine, which is 110 kilometers (68 miles) north of the oil sands hub of Fort McMurray, Alberta.

Teck also has a 20 percent stake in Suncor Inc's much-delayed C$13.5 billion Fort Hills, Alberta, oil sands project.   Continued...