UPDATE 2-Canada's Suncor scraps Voyageur oil sands plant

Wed Mar 27, 2013 7:30pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* Suncor to take C$140 mln charge on Q1 earnings

* Several analysts predicted plant would be scrapped

* Pays Total C$515 mln for upgrader partnership stake

By Jeffrey Jones

CALGARY, Alberta, March 27 (Reuters) - Suncor Energy Inc said on Wednesday it scrapped its long-delayed and partially built Voyageur oil sands upgrading plant in northern Alberta as competition in the North Dakota Bakken region cut potential returns from the multibillion-dollar venture.

Suncor, Canada's largest oil company, said the decision to pull the plug on Voyageur seven years after it was first approved will allow it to redirect capital to higher-return projects and possibly boost dividends and share buybacks.

It began re-evaluating the prospects last year for the complex plant, designed to "upgrade" bitumen from several oil sands projects into refinery-ready light crude.

The company had cited surging volumes of cheaper crude from the North Dakota Bakken region, which has similar characteristics with the upgraded bitumen, for the declining potential. The move shows how the change in North American oil flows is forcing shifts in how the industry allocates its capital.

"Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project," Suncor Chief Executive Steve Williams said in a statement.   Continued...