Official first oil isn’t expected until December, but Suncor Energy says it has already processed “several hundred thousand barrels” of bitumen froth at the new Fort Hills oilsands mine as test runs are conducted.
“80 percent of the plant has now been turned over to operations. Effectively that is 95 percent started up – 95 percent of those bits of equipment have been started up: the boilers, the cogens, the primary extraction facilities,” CEO Steve Williams told analysts on Thursday.
Suncor initiated construction on the 194,000 bbl/d project in October 2013. Two of six test runs have now been completed, and Williams said the results have been encouraging.
“These test runs are allowing us to prove out the mining, ore preparation, major site infrastructure, utilities and primary extraction. To date, no significant issues have been identified and our confidence in the high quality of construction continues to be confirmed,” he said.
“The test runs also help us to de-risk first oil in December and the ramp up of production through 2018. We have a high degree of confidence in a relatively smooth production ramp up. We plan to be sustainably operating the plant at 90 percent of capacity by this time next year.”
The last piece of the puzzle is the secondary extraction plant, which Williams said remains on schedule.
Last week Suncor filed a statement of claim against suppliers Jotun A/S, Chokwang Jotun Ltd. and Yong Hyun P&P Co. seeking at least $182 million in damages related to deficiencies in fireproof coating applied at the secondary extraction plant.
“We encountered a significant issue with the structural steel passive fire protection, and the costs associated with resolving that issue is part of why the Fort Hills budget was increased back in quarter one of this year,” Williams said.
“We recently filed a statement of claim to recover the additional costs from the supplier. There has been no impact to the overall project schedule. We’re on track to mitigate the fire protection issue prior to starting up the secondary extraction as planned by the end of this year.”
The CEO added that Suncor has also made progress towards the resolution of its commercial dispute with 29.2 percent Total SA, which has not approved a projected capital cost increase to $17 billion from $15 billion.