Total and Suncor form a strategic alliance in Canada’s oil sands
Total and Suncor form a strategic alliance in Canada’s oil sands
Total’s subsidiary Total E&P Canada Ltd. and Suncor Energy Inc. have signed several agreements to form a strategic oil sands alliance encompassing the Suncor-operated Fort Hills mining project, the Total-operated Joslyn mining project and the Suncor-operated Voyageur upgrader project. All three assets are located in the Athabasca region of the province of Alberta, Canada. Under the alliance, the companies will pool their combined interests in these projects, with the respective operator holding 51% and the other partner 49%.
The agreements comprise four significant and related transactions:
- Total is acquiring 19.2% of Suncor’s interest in the Fort Hills project. Taking into account Total’s acquisition of UTS, finalized in October 2010, the company will have an overall 39.2% interest in Fort Hills. Suncor, as operator, will hold 40.8%. Teck Resources Ltd. continues to own its 20%.
- Suncor is acquiring 36.75% of Total’s interest in the Joslyn project. Total, as operator, will retain a 38.25% interest in the project, with Occidental Petroleum (15%) and Inpex (10%) holding the remaining 25%.
- Total is also acquiring a 49% stake in the Suncor-operated Voyageur upgrader project located near Fort McMurray. This facility of which construction was suspended in 2008 will have a capacity of around 200,000 barrel per day (b/d) of upgraded products and will process Total’s Fort Hills and Joslyn bitumen production. Work will resume once the front-end engineering design is updated in 2011.
- As a result of the terms of these transactions and the related net balancing of the portfolio, in particular to contribute to the past costs of the Voyageur project, Total will pay Suncor CAD 1,751,250,000 (one billion, seven hundred and fifty-one million, two hundred and fifty thousand Canadian dollars), with a value date of January 1, 2011.
Suncor and Total have agreed to a joint commitment to develop Fort Hills and Voyageur in parallel so that both come on stream early 2016. The main engineering and procurement contracts for these two projects will be awarded in 2011. Both companies have also confirmed the Joslyn North Mine timetable, with production of 100,000 b/d commencing in 2017-2018, subject to receiving the necessary permits.
The implementation of the agreements is subject to securing the necessary regulatory approvals from the Government of Canada and certain other approvals. As a result of the agreements, Total will no longer proceed with the planned construction of an upgrader in Edmonton.
