UPDATE 1-Suncor raises Fort Hills mine costs, delays production ramp-up
(Adds details on Fort Hills mine, CEO quote, share price)
By Nia Williams
CALGARY, Alberta, July 29 (Reuters) - Canadian oil sands producer Suncor Energy said on Thursday that work needed to stabilize a slope at its Fort Hills mine in northern Alberta will delay a ramp-up in production and add to cash operating costs.
The company discovered in July that it will need to change the slope of the south face of the mine to keep it stable. Suncor Chief Executive Officer Mark Little told an earnings call the slope is critically important, and will be a key permanent pillar between the Fort Hills mine and Suncor's Aurora mine at its Syncrude project to the south.
"We don't want it moving and becoming unstable. In a lot of places it's not nearly as relevant, but this is a very critical piece of infrastructure going forward," Little said.
The stabilization work means Suncor will delay ramping up Fort Hills production until the end of 2021. Output is expected to be 45,000-55,000 barrels per day this year, down from a previous forecast of 65,000-85,000 bpd and cash costs will rise to C$37-C$42 in 2021, up from a previous forecast of C$25-C$29 a barrel.
However the work will not impact Suncor's long-term cash operating cost forecast, which is C$20 a barrel by 2040, Little said.
Fort Hills is an open-pit truck and shovel mine, where raw oil sands bitumen is extracted and then upgraded. Suncor is the majority-owner and operator of the mine, which started operating in 2018, in partnership with French oil major Total SE and Canadian mining firm Teck Resources.
Shares in Suncor, which reported on Wednesday a second-quarter profit due to higher crude prices, were last down 2.1% at C$25.18 on the Toronto Stock Exchange. (Reporting by Nia Williams Editing by Paul Simao)
