CALGARY, Alberta (Reuters) - Suncor Energy Inc, Canada’s largest oil and gas company, increased cost and capacity estimates on its Fort Hills oil sands project on Wednesday, and said oil production was on track to start up in late 2017.
The latest update on the giant mining project in northern Alberta, which was sanctioned well before oil prices collapsed in mid-2014, came as Suncor reported a stronger-than-expected fourth-quarter profit, helped higher global crude prices and improved reliability at the Syncrude oil sands project.
Suncor now expects Fort Hills to cost between C$16.5 billion and C$17 billion ($12.5 billion to $12.9 billion) because of construction delays caused by forest fires in northern Alberta last year and other building costs.
The previous cost estimate for Fort Hills, which is a joint venture with French oil company Total SA and Teck Resources Ltd was C$15.1 billion.
Calgary-based Suncor also upped the expected capacity of Fort Hills to 194,000 barrels per day from 180,000 barrels per day, meaning the project’s capital intensity will remain at C$84,000 per flowing barrel of bitumen for Suncor.
Teck said in a statement it will record an after-tax impairment charge of C$164 million in its fourth-quarter results because of the increased capital cost.
“Bringing our key major growth projects, Fort Hills and Hebron, to first oil by the end of this year continues to be a top strategic priority for us,” Suncor Chief Executive Officedr Steve Williams said in a statement.
Hebron is an offshore project in Atlantic Canada and also under construction.
Suncor reported net earnings of C$531 million or 32 Canadian cents per share. In the year-prior quarter, Suncor recorded a net loss of C$2 billion, or C$1.38 a share, because of non-cash impairment charges and an unrealized foreign exchange loss of U.S. dollar-denominated debt.
Suncor’s fourth-quarter operating profit, which excludes one-time items, was C$636 million, or 38 Canadian cents per share, versus a loss of C$26 million, or 2 Canadian cents per share, in the year-ago period.
Analysts had predicted earnings of 29 Canadian cents per share, according to Thomson Reuters I/B/E/S.
The company produced a record 738,500 barrels of oil equivalent per day in the fourth quarter, up from 582,900 boepd in the same period of 2015, due mainly to acquiring a majority share in Syncrude.
Refinery throughput was 427,300 barrels per day in the final quarter of 2016, down slightly from 430,200 bpd in the same period a year earlier.
Reporting by Nia Williams; Editing by Lisa Shumaker