Suncor Inc. - Project Stuart.

CALGARY, Alberta--(BUSINESS WIRE)--Dec. 22, 1995--Suncor Inc. (TSE, ME, ASE, VSE, AMEX: SU) today announced it has reached an agreement with two Australian companies, Southern Pacific Petroleum NL and Central Pacific Minerals NL, to begin development work to demonstrate the commercial viability of producing oil from Australian oil shale.

Suncor will invest $7 million to conduct preliminary engineering and complete commercial negotiations to build a shale oil plant in Gladstone, a port city on the east coast in Queensland, Australia. The agreement covers the development of the Stuart oil shale deposit which is estimated to contain the equivalent of three billion barrels of shale oil.

"Suncor was the first in the world to pioneer the commercial development of the oil sands," says Suncor president and chief executive officer Rick George. "We are uniquely positioned to apply our expertise in oil sands development in other parts of the world." Development work is expected to take six to nine months to complete. After that the partners will decide whether to proceed with the 4,500 barrel-a-day plant.

The project is estimated to cost about $200 million, of which Suncor would contribute up to an additional $65 million over the next two years. At that point, Suncor would earn a 50 percent interest in the project.

The plant would test the scaling-up of a Canadian technology, known as the Taciuk processor, developed by the Alberta Oil Sands Technology Research Authority (AOSTRA). The Taciuk processor combines the extraction, upgrading and energy-generating processes of traditional oil sands/shale projects and requires less capital and equipment.

If the project is successful, Suncor and its partners have plans to develop a second and third stage, which could ultimately result in an 85,000 barrel a day commercial operation over a 10-year period.

In addition, Suncor has the right to acquire an option for $3.5 million to purchase a 22.4 percent interest in Southern Pacific Petroleum and Central Pacific Minerals. This option can be exercised any time up to six months after the shale oil plant begins operation. George says the project fits strategically with Suncor's growth plans. "Our core businesses continue as the foundation of our growth," says George.

Suncor recently announced plans to spend more than $1 billion to increase production at its conventional and oil sands operations. "To create additional shareholder value, we are pushing the boundaries of our existing businesses and looking for new yet related energy opportunities."

Suncor plans to diversify in stages through a series of modest investments. "We are approaching growth as a staircase. We plan to move up the stairs quickly, but take them one step at a time," says George.

Suncor is a Canadian integrated oil and gas company operating an oil sands plant in Fort McMurray, Alta., a conventional oil and gas business in Western Canada and a refining and marketing operation in Ontario and Quebec. Suncor common shares are listed on the Toronto, Montreal, Alberta, Vancouver and American stock exchanges (Stock Symbol SU).

CONTACT: Suncor, Inc.

John Rogers, 403/269-8670