Suncor seen shelving Voyageur oil sands plant

Mon Mar 25, 2013 7:08pm EDT
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* To announce fate of upgrading plant by month end

* Shaky economics point to deferral or cancellation

* Start-up of Imperial Kearl project also within days

By Jeffrey Jones

CALGARY, Alberta, March 25 (Reuters) - Suncor Energy Inc is expected to shelve plans for a multibillion-dollar oil sands processing plant in northern Alberta when it announces the fate of the facility in the coming days, blaming a forecast for weakening returns.

The decision by Canada's largest oil company on its long-delayed and partially built Voyageur upgrading plant in Alberta is one of a pair of major developments in the oil sands due this week, the other being the targeted start-up of Imperial Oil Ltd's Kearl mining project after about four years of construction.

The two events show the changing dynamics of Canada's oil sands industry as it deals with more difficult economics due to surging production of cheaper light oil from the North Dakota Bakken and a move away from "upgrading" the oil sands bitumen into lighter, refinery-ready oil in Alberta.

Suncor said in February that the "economic outlook for the Voyageur upgrader project is challenged" and it cut any expenditures on it to a minimum pending a decision on going ahead.

Based on the current weak financial outlook facing new facilities built to pump out synthetic light crude, Suncor will postpone the 200,000 barrel a day Voyageur project indefinitely, analysts said on Monday.   Continued...