With key oilsands mine expected to be tapped out in a decade, Suncor reveals proposed expansions

What Suncor’s investors have been waiting to hear is how it plans to keep profitable upgraders churning when the existing Base Plant mine becomes tapped out in the coming decade. Photo by Vincent McDermott/Fort McMurray Today

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Suncor Energy Inc., one of Canada’s largest oil companies, is under pressure to resolve a challenge that’s been decades in the making.

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Its Base Plant in the oilsands — which traces back to the 1960s — will need a new supply of bitumen by the mid-2030s when the existing mine is widely expected to be depleted.

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Rich Kruger, Suncor’s chief executive, said in an interview the company has identified a number of proposed expansion projects that could dramatically boost production, enough to replace its Base Plant mine and then some.

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Kruger is revealing Suncor’s growth strategy at the company’s annual investor day on Tuesday, which comes at a time of apparent momentum toward a possible new export pipeline for crude from Alberta’s oilsands where Suncor is a top producer.

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The oilpatch veteran did not wade into the pipeline debate, calling it “a question that’s broader than Suncor.” But he did say the company has identified enough untapped potential at its existing mines — up to 400,000 barrels per day in production — to fuel a significant stage of growth.

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But the company has no plans for a new oilsands mine.

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“We think those (projects) can compete, and will make economic sense, whether the company ultimately grows materially long-term, or if we were to stay in a world much like today, and we were to stay of a similar size.

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“We think this is a winning set of opportunities in either scenario.”

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Suncor’s Base Plant is the site of Canada’s first ever oilsands operations, which began in 1967. A big source of wealth for the company are its upgraders, which convert thick, heavy bitumen from the sand into a higher-value oil.

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What the company’s investors have been waiting to hear is how it plans to keep those upgraders churning when the existing Base Plant mine becomes tapped out in the coming decade.

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Kruger said the firm now has the answer to those questions. The most significant sources of production growth would be two key projects — an expansion of Suncor’s Firebag operations and another property called Lewis, both northeast of Fort McMurray.

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According to the company, it already has regulatory approvals to develop Lewis. It also filed an application on Monday with the Alberta Energy Regulator seeking permission to nearly double thermal production at Firebag.

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“We think with the province’s ambition for growth — I won’t take it out of the regulator’s hand — I would anticipate ultimate approval,” Kruger said in an interview.

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“What this means is, the timing, pace and scope of developments are really up to us. We don’t have to go ask for long, drawn-out approvals.”

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The company has not officially sanctioned either project, with final investment decisions expected in the next 18 months to two years.