Two northeast Fort McMurray expansions power oilsands producer’s lower-cost growth plan
Steam, not shovels, will drive most of Suncor Energy Inc.’s bitumen output by 2040 — and it plans to do it without building a new oilsands mine.
According to Reuters, Suncor told investors its production mix will flip over the next 15 years: today, 70 percent of its oilsands crude comes from large-scale mining in northern Alberta and 30 percent from deeper deposits produced with steam-assisted in situ technology.
By 2040, 60 percent of its oilsands barrels are expected to come from in situ developments and just 40 percent from mining.
Chief executive Rich Kruger said, “In situ delivers two times the relative cash flow per barrel compared to mining today.”
The Financial Times reports this pivot responds to declining volumes from Suncor’s Base Plant in the oilsands, which dates back to the 1960s and is widely expected to be depleted by the mid-2030s.
The Base Plant, the site of Canada’s first-ever oilsands operations, has long supplied Suncor’s upgraders that convert thick, heavy bitumen into higher-value oil, and investors have been waiting to hear how the company plans to keep those upgraders “churning” when the mine becomes tapped out.
Kruger said Suncor has identified a set of proposed expansion projects that could “dramatically boost production, enough to replace its Base Plant mine and then some.”
He said Suncor’s existing production sites have about 400,000 barrels per day of “undeveloped capacity,” or oil in the ground that has not yet been drilled.
He said this 400,000‑barrel capacity could be developed at costs “well below” those of a typical greenfield project.
The Financial Times reports that Suncor expects most of its production growth to come from two in situ projects: an expansion of its Firebag operations and another property called Lewis, both northeast of Fort McMurray.
Reuters reported that Firebag is already Suncor’s most profitable asset, producing approximately 245,000 barrels per day using in situ technology.
On Monday, Suncor filed a regulatory application to expand Firebag’s permitted capacity from an existing limit of 368,000 barrels per day to 700,000 barrels per day.
While most of the planned ramp-up in in situ development will come after 2032, Suncor expects to increase Firebag’s output to 275,000 barrels per day by 2028 through debottlenecking and optimisation projects.
The Lewis in situ development is expected to produce 160,000 barrels per day and will be developed in phases, sequenced to coincide with the gradual depletion of the Base Plant mine.
The Financial Times said Suncor already has regulatory approvals to develop Lewis.
Kruger said that with “the province’s ambition for growth” he would “anticipate ultimate approval” for the Firebag expansion, even though the regulator will make the decision.
He said this leaves “the timing, pace and scope of developments” with the company and removes the need for “long, drawn‑out approvals.”
Suncor’s investor day was highly anticipated, as the market and shareholders looked for a plan to secure long-term bitumen supply to replace Base Plant production.
Suncor expects to grow its upstream production by about 100,000 barrels per day by 2028, according to Reuters.
The Financial Times reported that Suncor now has “no plans for a new oilsands mine,” even though there is speculation about whether a new oilsands mine would be needed to fill a potential new export pipeline that could move about a million barrels of oil per day.
Instead, Suncor is leaning on its existing assets: Reuters said Kruger disclosed that its latest reserve estimate shows 11bn barrels more than previously, bringing total bitumen reserves to 30bn barrels.
Kruger said, as per the Financial Times, “We think this is a winning set of opportunities in either scenario.”
