Canada’s Fort Hills Oil Sands Project Achieves First Oil

The Fort Hills oil sands project in Alberta, Canada, has achieved first oil, with production expected to ramp up over the coming months to 180,000 bpd, France’s Total—which holds 26 percent in the project—said on Monday.

Canada’s Suncor is operator of the project with a 53.06-percent interest, and Teck Resources Limited holds the remaining 20.89 percent.

Fort Hills, located some 90 kilometers (56 miles) north of Fort McMurray, has a capacity to produce 194,000 bpd, of which some 103,000 bpd net to Suncor, the Canadian company said in its press release.

Production will continue to ramp up through the first quarter of 2018, Suncor said, adding that Fort Hills remains on track to reach 90 percent capacity by the end of this year.

The project has been developed in phases and has run into disagreements over capital expenditures between Total and Suncor.

“We are pleased to see Fort Hills achieving first oil after a challenging construction program of several years in a difficult climatic environment and we congratulate the operator Suncor for having brought to bear all of its expertise to carry out this project”, Arnaud Breuillac, President Exploration & Production at Total, said on Monday.

Total has gradually cut its interest in Fort Hills to 26.05 percent from the 39.2 percent stake it held in 2015, in line with its strategy to channel capex on low breakeven projects and manage investments in the most profitable projects, the French company said on Monday. Once the final cost of the Fort Hills project is known, Total expects to have its stake at some 25 percent.

The latest decrease in Total’s interest in Fort Hills was announced at the beginning of this year, when Suncor said that the Fort Hills partners had resolved the previously announced commercial dispute and reached an agreement under which Suncor and Teck Resources bought additional working interest in the project from Total.

Apart from Fort Hills, Total holds 50 percent in the Surmont project in Canada with a gross capacity of 150,000 bpd. Total’s production in Canada was 59,000 bpd last year.

In September 2017, Total CEO Patrick Pouyanne said that the French group was not in a hurry to sell its oil sands assets, and would wait for oil prices to rise before selling.

Tsvetana Paraskova for OilPrice.com