February 11, 2013
Massive oilsands project shelved once again
Construction on the Voyageur upgrader near Fort McMurray, Alberta is being put on hold again, after Suncor Energy Inc. reported a net loss related to the multi-billion dollar project.
“Suncor’s view is that the economic outlook for the Voyageur upgrader project is challenged,” stated Suncor’s financial report for the fourth quarter of 2012.
“Suncor and its partner continue to work diligently towards determining an outcome for the project. The partners have been considering options for the project, including the implications of cancellation or indefinite deferral.”
Suncor released its financial results on Feb. 5, which reported a net loss of $562 million for the last three months of 2012, which works out to about 37 cents per share.
To put this loss in perspective, Suncor generated net earnings of $1.43 billion, or 91 cents per share, during the same period a year earlier.
The loss can be largely attributed to an after-tax impairment charge of $1.487 billion for the $20.6 billion Voyageur upgrader project.
As a result of this charge Suncor’s carrying value for net assets relating to the Voyageur upgrader project was about $345 million on December 31, 2012.
In the last few years, the Voyageur project has been a key element in Suncor’s long-term growth strategy.
For example, Suncor’s 2011 capital expenditure outlook allocated $260 million for construction of the project.
Suncor’s capital plan for 2012 was focused on investing about $3.6 billion on growth projects, with about 60 per cent of this spending directed towards the Firebag Stage 4 expansion project, the Fort Hills and Joslyn oilsands mining projects and the Voyageur upgrader.
In addition, Suncor and Total E&P Canada Ltd. finalized a strategic alliance in March 2011 to restart construction of the $20.6 billion Voyageur upgrader, as well as the Fort Hills and Joslyn oilsands projects.
Suncor and Total E&P Canada Ltd, a subsidiary of French-based Total, signed the deal to develop the Voyageur upgrader and the Fort Hills mine in parallel, so that both could come on stream in 2016.
Total acquired a 49 per cent interest in Suncor’s Voyageur upgrader and upon completion, Suncor was to operate the planned 200,000 barrel per day facility.
The financial report said no formal decisions have been made regarding the project, but the partners are working toward a decision by the end of the first quarter of 2013.
“The Voyageur upgrader project cannot be sanctioned to proceed without the approval of both partners and in the case of Suncor, Suncor’s board of directors,” said the report.
“In the interim, Suncor and its partner have agreed to minimize expenditures on the project pending a decision.”
Suncor suspended construction of the Voyageur facility in late 2008, in response to falling oil prices, uncertain financial markets and high capital costs.
The company also slashed its 2009 capital budget by one-third to $6 billion.
|MOST POPULAR STORIES|
|TODAY’S TOP CONSTRUCTION PROJECTS|
These projects have been selected from 460 projects with a total value of $2,479,930,740 that Reed Construction Data Building Reports reported on Wednesday.
$700,000,000 Strathcona County AB Prebid
$45,000,000 Coquitlam BC Negotiated
$45,000,000 Burnaby BC Negotiated
- Concerns raised about P3 approach for Saskatchewan schools
- Journal of Commerce Preview for the week of March 10th, 2014
- PHOTO GALLERY: 2014 Wood Design Awards
- Wastewater treatment plant tops priority list
- Lone bidder prepares P3 proposal for Alberta schools
- Industry reacts as details emerge about job grant agreement
- Demand rising for Kitimat camps
- Open textbooks are key to skills training
- InPower BC awarded John Hart project contract
- Skills training investment in Manitoba
- Premier claims pact justifies need for $10 billion dam
- VIDEO: LiUNA Local 183 Training Centre introduces new programs
- VIDEO: RCCAO Pre-Budget Roundtable on infrastructure
- Storied Burka Architects downsizes and transitions
- Learning Centre Construction
- Collaboration with industry important to workplace safety improvement: Witmer
- Robot-powered construction revolution
- Engineers design permanent flood protection for Calgary
- Inquest called into fatal Vecchio incident
- Infrastructure Ontario issues RFQ for Ontario Place construction
- Cisco picks Toronto for location of new innovation hub