VANCOUVER (Reuters) - Suncor Energy Inc (SU.TO), Canada’s largest oil and gas company, said on Wednesday it was moving ahead with its Fort Hills oil sands project in Northern Alberta, with first production expected as soon as the fourth quarter of 2017.
The C$13.5 billion ($12.9 billion) project, located some 500 km (310 miles) north of Edmonton, Alberta, is a joint venture with France’s Total SA (TOTF.PA) and diversified mining company Teck Resources Ltd TCKb.TO.
Suncor separately said its third-quarter profit rose 10 percent, boosted by record production from its Oil Sands segment and favorable pricing for western Canadian crude oil.
Net profit in the quarter was C$1.7 billion, or C$1.13 per share. That compares with earnings of C$1.5 billion, or C$1.01 per share, in the third quarter of 2012.
Operating profit, which excludes most one-time items, rose to C$1.4 billion, or 95 Canadian cents per share, up from C$1.3 billion, or 84 Canadian cents, in the year-ago quarter.
That beat the average analyst estimate of 87 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Suncor’s cash flow, a glimpse of its ability to pay for new projects like Fort Hills, fell 7 percent to C$2.5 billion, or C$1.69 per share, from C$2.7 billion, or C$1.79.
Production from the Calgary-based company’s oil sands operations rose 16 percent to a record 396,400 barrels per day, while total output from its operations in North America, the North Sea and north Africa was 11 percent higher at 595,000 barrels of oil equivalent per day.
The Fort Hills oil sand mine, originally a joint venture between Petro-Canada, Teck and UTS Energy Corp, was shelved at the onset of the global financial crisis in 2008, but was brought back to life after Suncor took over Petro-Canada.
Last year, Suncor pushed back the start up of the multi-billion dollar project by one year, to 2017, as the company and its partners looked for ways to boost its profitability.
Suncor said on Wednesday that the economics were positive, touting the project as one of the best undeveloped oil sand assets in Canada’s Athabasca region.
“The Fort Hills project is aligned with our strategic objective to only invest in projects that will provide the company with long-term profitable growth,” said chief executive Steve Williams in a statement.
Williams added that the project, which has a planned production capacity of 180,000 barrels per day, is expected to be a significant source of long-term cash flow for Suncor.
The Canadian oil giant owns a 40.8 percent stake in Fort Hills, with its share of total capital investment pegged at C$5.5 billion. Total holds 39.2 percent of the project with Vancouver-based Teck owning the remaining 20 percent.
Additional reporting by Scott Haggett in Calgary and Nicole Mordant in Vancouver; Editing by Gopakumar Warrier and Jeremy Laurence