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SUNCOR MAKES LONG-TERM COMMITMENT TO OIL SANDS RESTRUCTURING TO INCREASE PROFITABILITY

 SUNCOR MAKES LONG-TERM COMMITMENT TO OIL SANDS
 RESTRUCTURING TO INCREASE PROFITABILITY
 FORT MCMURRAY, Alberta, Oct. 28 /PRNewswire/ -- Suncor Inc. today announced a series of initiatives designed to substantially improve the profitability of its Fort McMurray oil sands business. Achieving these initiatives, which are the result of a major strategic review conducted over the last eight months, will secure the long-term future of the oil sands operation.
 "We are making a fundamental change to the structure of our oil sands business that will make our production comparable on a cost basis with Canadian conventional crude oil," said Rick George, president and chief executive officer, Suncor Inc. "Our goal is to cut the cash costs of producing high quality synthetic crude oil by $5 to $7 a barrel by 1996."
 To achieve this goal:
 Suncor has written agreements to acquire new oil sands leases, which contain sufficient reserves to produce more than one billion barrels of recoverable light sweet synthetic crude. At current production rates, these leases give Suncor sufficient reserves to sustain production for 50 years.
 Suncor will immediately invest $100 million in new mining equipment, which will lower cash costs in the range of $3 a barrel by 1995. A new truck and shovel system will be phased in over the next 18 months to ensure no production interruption. The system replaces the bucketwheel excavator system, which has been in place since the plant opened in 1967.
 Suncor has completed a feasibility study and is committing $5 million to undertake detailed engineering and commercial evaluations on a new combustion technology for its utilities plant. This plant supplies electricity and steam to the rest of the oil sands operation. The fluidized bed combustion technology significantly reduces sulphur dioxide (SO2) emissions and enables Suncor to meet new Alberta emission standards by 1996. The preliminary cost estimate for the new utilities plant is $270 million. It has the potential to reduce costs by approximately $1.50 a barrel.
 Suncor also plans to implement operating efficiencies and production improvements, including upgrader modifications, which will increase production capacity to approximately 68,000 barrels a day by 1994. Suncor expects the combination of these improvements will further reduce cash costs by up to $2.50 a barrel.
 "These steps demonstrate our commitment to the oil sands and will significantly improve the long-term outlook of our Fort McMurray operation, which is a vital asset to Suncor and a major contributor to the Province of Alberta," George said. "They represent a dramatic leap forward in the continuing implementation of Suncor's strategic plan and allow Suncor to create greater value from our asset base in the oil sands industry."
 "The changes in mining methods necessary to implement our strategy, however, will mean that we will be reducing our employment level by approximately 350 to 400 over the next 18 months," George said. Suncor's Oil Sands Group currently employs about 2,400 people.
 "We will phase in the truck and shovel system and that should help ease the impact on individual employees," George said. "Suncor is committed to the fair treatment of employees and is working closely with the Energy and Chemical Workers' Union to develop plans and programs to make the transition easier."
 As a result of the initiatives announced today, Suncor will write down certain mining and utilities assets, and take a provision for additional costs, in the amount of $85 million after tax. This adjustment is reflected in the company's third-quarter earnings released today.
 "These changes will have a one-time effect on our earnings statement, but will also have a long-term positive impact on Suncor's operating and financial results," George said. "Today's commitment to the oil sands will continue to benefit Fort McMurray and the Province of Alberta for a long time to come."
 Suncor is a Canadian integrated oil and gas company. In addition to operating the world's first commercial oil sands plant, Suncor explores for and produces conventional crude oil and natural gas in Western Canada. The company also markets natural gas in Canada and the United States. It owns and operates a 70,000 barrel-a-day refinery in Sarnia, Ont., and manufactures, distributes and markets transportation fuels, petrochemicals and heating oil under the Sunoco and Sunchem brand names.
 Suncor Instalment Receipts are listed and posted for trading on the Toronto, Montreal, Alberta and Vancouver stock exchanges (symbol SU.R). Sun Company, Inc. of Philadelphia, holds 68 percent of Suncor's common shares and Ontario Energy Corporation, a corporation owned by the Province of Ontario, holds 14 percent. The public holds 18 percent.
 -0- 10/28/92
 /Media Advisory: Media are invited to attend a background briefing by Rick George, Suncor president and CEO, in Calgary, Edmonton and Toronto. This briefing will be held by video conference at 1:00 pm (Alberta time)/3:00 pm (Toronto time). Details are available from Suncor's communication department at 416-733-7187./
 /Note to editors: Suncor also will issue a separate news release today (NY088) entitled 'Suncor Announces Third-Quarter Results and Quarterly Dividend'/
 /CONTACT: media inquiries, Jeanette King, corporate manager, communications, 416-733-7187, or investor relations, Brian McInerney, director, investor relations, 416-733-7149, both of Suncor/
 (SU.PR.A) CO: Suncor Inc. ST: Alberta IN: OIL SU:


KD -- NY086 -- 6063 10/28/92 13:32 EST
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Date:Oct 28, 1992
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