* Suncor to take C$140 mln charge on Q1 earnings
* Several analysts predicted plant would be scrapped
* Pays Total C$515 mln for upgrader partnership stake
By Jeffrey Jones
CALGARY, Alberta, March 27 Suncor Energy Inc
said on Wednesday it scrapped its long-delayed and
partially built Voyageur oil sands upgrading plant in northern
Alberta as competition in the North Dakota Bakken region cut
potential returns from the multibillion-dollar venture.
Suncor, Canada's largest oil company, said the decision to
pull the plug on Voyageur seven years after it was first
approved will allow it to redirect capital to higher-return
projects and possibly boost dividends and share buybacks.
It began re-evaluating the prospects last year for the
complex plant, designed to "upgrade" bitumen from several oil
sands projects into refinery-ready light crude.
The company had cited surging volumes of cheaper crude from
the North Dakota Bakken region, which has similar
characteristics with the upgraded bitumen, for the declining
potential. The move shows how the change in North American oil
flows is forcing shifts in how the industry allocates its
"Since 2010, market conditions have changed significantly,
challenging the economics of the Voyageur upgrader project,"
Suncor Chief Executive Steve Williams said in a statement.
Analysts have also said the project was pressured by rising
labor costs, adding that investors welcomed the prospect of
The 200,000 barrel-per-day upgrader was part of a larger oil
sands partnership with France's Total SA that also
includes the proposed Fort Hills and Joslyn oil sands mines in
northern Alberta. Suncor had started construction, but work was
halted during the financial crisis in 2008-2009.
Suncor said it will take charges of C$140 million ($134
million) to earnings and C$180 million to cash flow in the first
quarter as a result of the decision.
Suncor also said it bought Total SA's interest in
the upgrader partnership for C$515 million to gain full control
of the assets.
The partnership's other assets include a housing facility, a
storage tank farm, a heated bitumen terminal and other
facilities, Suncor spokeswoman Sneh Seetal said.
An official with Total said the company's Canadian chief
will comment on the impact of the decision on Thursday.
Shares in Suncor finished down 33 Canadian cents at C$30.40
on the Toronto Stock Exchange. The company announced the
cancellation of the project after the market closed.