UPDATE 1-Teck content with Suncor's Fort Hills delay
* Says Fort Hills remains core holding
* Will hang onto Lease 421 stake
OTTAWA Nov 24 (Reuters) - Teck Resources Ltd (TCKb.TO) is comfortable with Suncor Energy Inc's (SU.TO) decision not to fast track development at the planned Fort Hills oil sands project, Chief Executive Don Lindsay said on Tuesday.
Lindsay told reporters that he still considers its 20 percent stake in the Fort Hills project to be a core holding for the mining company, though Suncor, the project's operator, has put off making a development decision on the project for at least another year.
"We are very supportive of Suncor's decision," Lindsay told reporters following a speech in Ottawa.
The Fort Hills oil sands mine was delayed a year ago by Petro-Canada when costs skyrocketed. Suncor, which assumed a 60 percent Fort Hills stake when it bought Petro-Canada in August, said earlier this month that it did not yet know when it would resume work at the site, opting to complete work on other projects that had been halted during the economic crisis.
The expected cost of the Fort Hills mine, once pegged at C$14 billion ($13.4 billion), has dropped sharply since the recession and falling oil prices forced most operators in the oil-rich region of northern Alberta to suspend construction on new projects, freeing up scarce labor and materials.
UTS Energy Corp UTS.TO, which holds the remaining 20 percent stake in Fort Hills, said earlier this year that it may cost only C$8 billion to build a facility capable of producing 160,000 barrels per day, with further savings available if the size of the project was halved.
Teck and UTS have also teamed up to acquire other leases in Alberta's oil sands region, which contains more than 170 billion barrels of oil, the biggest reserves outside the Middle East.
Earlier this month, UTS sold its half share in what it calls the Lease 421 area to Imperial Oil Ltd (IMO.TO) and Exxon Mobil Corp (XOM.N) for C$250 million. However Teck, which is trying to cut a debt load that ballooned due largely to last year's acquisition of coal producer Fording, plans to keep its stake in the property.
"We think it's an excellent lease and we'll be hanging onto it," Lindsay said. (Reporting Randall Palmer, writing by Scott Haggett; Editing by Jeffrey Hodgson) ((email@example.com; Reuters Messaging: firstname.lastname@example.org; +1 403 531-1622))
- Tweet this
- Share this
- Digg this