Calgary-based Suncor Energy Inc. has announced it will go ahead with its $13.5-billion Fort Hills oilsands project in northern Alberta.
Suncor owns 40.8 per cent of the joint venture project with Teck Resources Ltd. and France's Total SA. The company expects to begin producing oil in 2017, with a planned production capacity of 180,000 barrels a day.
"The Fort Hills project is aligned with our strategic objective to only invest in projects that will provide the company with long-term profitable growth. With a mine life in excess of 50 years, this project will provide a stable source of cash flow over the long term," said CEO Steve Williams in a statement Wednesday night.
The oil and gas producer is investing $5.5 billion of its own capital in the project.
In 2012, Suncor said it was slowing its expansion plans, including its Fort Hills, Joslyn and Voyageur projects to make sure its money would yield the best return.
Suncor and the co-owners of the Joslyn mining project continue to focus on design engineering and regulatory work and are awaiting approvals, but the Voyageur upgrader project was cancelled earlier this year.
The company completed the sale of a significant portion of its natural gas business in Western Canada for proceeds of $1 billion.
On Wednesday, Suncor announced third-quarter net income of $1.7 billion or $1.13 per share, compared with net earnings of $1.5 billion or $1.01 per share for the same period in 2012.
Record oilsands production
Quarterly production hit a record 396,400 barrels per day at its oilsands operations and the company achieved lower cash operating costs of $32.60 per barrel.
“This quarter's results reflect a significant step forward in our drive to increase profitability," Williams said. "We achieved record oilsands production in the quarter as a result of debottlenecking activities that unlocked production in our mining operations, increased our operational flexibility and added incremental barrels at a low cost."
Cash flow from operations was $2.528 billion for the third quarter of 2013, down from $2.743 billion for the third quarter of 2012.
Suncor said it has been able to sell the majority of its oil at Brent-based pricing of $109 a barrel, rather than the Canadian crude price of $83 because of its logistics network.
It says securing market access is a key to maximizing profitability. Suncor has commitments for rail cars to ship its crude for refining in Montreal as well as expecting to refine oil on the U.S. Gulf Coast when the Keystone South pipeline begins operating.