Suncor Energy Restarts Construction of Halted $4 Billion Upgrader in Alberta

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Researched by Industrial Info Resources (Sugar Land, Texas)--Suncor Energy (NYSE:SU) (Calgary, Alberta) has restarted construction of the $4 billion Voyageur upgrader, which was halted in 2008 because of the slowing economy and declining oil prices. Suncor has formed a joint venture with Total S.A. (NYSE:TOT) subsidiary Total E&P (Calgary) to construct the upgrader. Suncor will have 51% ownership, and Total will have the remaining 49%.

During the first quarter of 2011, Suncor completed transactions with Total E&P that brought them into the Voyageur upgrader project and increased their working interest in the Fort Hills oil sands mining project. Suncor received $2.662 billion net from Total E&P in consideration for Total E&P acquiring a 49% interest in the Voyageur upgrader project, an additional 19.2% interest in the Fort Hills project, rights to certain knowledge and technology licenses, and Total assuming its share of capital expenditures subsequent to the transaction effective date of January 1, 2011.

Upgraders transform oil sands bitumen into synthetic crude oil that can be refined into other products. The four main steps of conventional upgrading are thermal conversion, catalytic conversion, distillation and hydrotreating. Voyageur will include hydrotreaters, a hydrogen plant, hydrocracker, coker, a sulfur recovery unit and supporting utilities. The site work for the Voyageur project was about 10% complete when the project was halted. The company recommenced site preparation work for the proposed upgrader in March 2012. The project is expected to be commissioned by early 2016.

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