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Voyageur upgrader construction to revive oilsands construction jobs near Fort McMurray, Alberta

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by Richard Gilbert

Construction on the postponed Voyageur heavy-oil upgrader near Fort McMurray, Alta. will be restarted in 2011, as a result of a strategic partnership between Suncor Energy Inc. and Total E&P Canada Ltd.

Construction on the postponed Voyageur heavy-oil upgrader near Fort McMurray, Alta. will be restarted in 2011, as a result of a strategic partnership between Suncor Energy Inc. and Total E&P Canada Ltd.

“The agreement with Total is an important element of Suncor’s plans to more than double our oilsands production,” said Suncor president and chief executive officer Rick George.

“The deal brings a strong partner to the table, helping us to accelerate development of our growth portfolio and share in the capital investment in a third upgrader and development of new mining projects.”

Suncor and Total, have signed several agreements, including a deal to complete the Voyageur upgrader.

Under the agreement, Total is acquiring a 49 cent stake in the Suncor-operated Voyageur upgrader project located near Fort McMurray. Construction of the bitumen upgrading facility was suspended in 2008, when Suncor responded to falling oil prices, uncertain financial markets and high capital costs by slashing its 2009 capital budget by one-third to $6 billion.

Work on the project is scheduled to resume this year, once the front-end engineering design is updated. Suncor’s 2011 capital plan includes $260 million for construction of the project.

The partnership also includes plans for the two companies to jointly develop the Fort Hills and Joslyn oilsands mining projects, which will supply bitumen to the Voyageur project.

Suncor Energy gained a 60 per cent interest in Petro-Canada’s Fort Hills project when it took over the company in 2009.

Total is acquiring 19.2 per cent of Suncor’s interest in the $20 billion integrated mine and upgrader project. This transaction gives Total a 39.2 per cent interest in Fort Hills. Suncor, as operator, will hold 40.8 per cent.

Suncor’s 2011 capital plan includes $100 million for construction of the Fort Hills project. Suncor and Total have agreed to develop the Fort Hills mine and Voyageur upgrader in parallel, so that both come on stream in 2016.

Total is currently in the engineering design stage and the regulatory approval process to construct and operate the proposed Joslyn North project.

Suncor is acquiring 36.75 per cent of Total’s interest in the Joslyn project. Total, as operator, will retain a 38.25 per cent interest.

It’s estimated project construction will create about 16,560 person-years of direct construction employment.

The construction workforce is expected to peak at about 4,100 workers.

The Joslyn mine is scheduled to start operations in 2017 and will reach a production rate of 100,000 barrels per day.

Suncor’s board recently approved a $6.7 billion capital spending plan for 2011, which includes about $2.8 billion for growth projects.

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