Oil-Sands Lessons

Since the start-up of Suncor's first processing facility in 1967, oil sands have provided an increasingly important oil source -- for Alberta, for Canada and the world. Motivated by oil prices in excess of $100 per barrel, oil-sands projects were completed under a "schedule at any cost&quo...

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Bibliographic Details
Published in:Oil & Gas Investor 2010-03, Vol.30 (3), p.N_A
Main Authors: Walters, Neal, Scott, Vance, Civi, Hakan
Format: Article
Language:English
Subjects:
Breakeven analysis
Capital costs
Capital expenditures
Crude oil prices
Design
Energy economics
Oil fields
Oil reserves
Oil sands
Operating costs
Planning
Prices
Production capacity
Project management
Startups
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Summary:Since the start-up of Suncor's first processing facility in 1967, oil sands have provided an increasingly important oil source -- for Alberta, for Canada and the world. Motivated by oil prices in excess of $100 per barrel, oil-sands projects were completed under a "schedule at any cost" mindset -- accelerating time to production with little concern for the impact on capital costs. As a result, breakeven economics rose to as much as $55 to $65 per barrel for steam-assisted gravity drainage technology and $70 to $85 per barrel for mining/upgrading. While dramatic increases in key input-factor costs such as energy, steel and labor certainly have played a significant role, the impact of capital-project and construction management has been even more dramatic. Like other asset-intensive industries, oil-sands developers and operators require well-executed large capital investments and operational excellence to realize their strategic objectives. Most of the lessons of capital-project excellence can be adopted in oil-sands development.
ISSN:0744-5881