October 23, 2008 / 1:39 PM / 10 years ago

UPDATE 1-Fort Hills partners may make initial investment - UTS

(Recasts; adds details)

Oct 23 (Reuters) - Oil sands developer UTS Energy Corp UTS.TO said partners in the Fort Hills project are contemplating making initial investment in only the mining and extraction portion of the project, while a final decision has not been taken.

The Fort Hills oil sands project, one of $100 billion worth of oil sands developments under way or on the drawing board, is jointly operated by UTS, oil and gas company Petro-Canada PCA.TO, and mining and drilling company Teck Cominco Ltd TCKb.TO.

The partners are still reviewing preliminary total cost estimates of the project and deferring decision to construct the upgrader due to several factors including current commodity, equity and credit market conditions, the company said.

An upgrader converts tar-like bitumen stripped from oil sands into refinery-ready synthetic crude.

The Fort Hills partnership does not yet have a definitive cost estimate for a stand-alone mine, extraction plant and infrastructure, the company said.

However, UTS said it expects total costs for the mining and extraction project to be in the range of $13 billion to $15 billion, and sees the company’s corresponding costs to be about $1.1 billion to $1.5 billion.

Petro-Canada owns a 60 percent stake in the northern Alberta project, while UTS and Teck Cominco own 20 percent each.

Shares of UTS were trading up 6 Canadian cents at C$1.05 Thursday on the Toronto Stock Exchange. (Reporting by Arup Roychoudhury in Bangalore; Editing by Deepak Kannan) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuters.net))

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