Suncor Begins Effort to Expand Oil Sands Mining

Suncor Energy Inc. initiated the regulatory approval and stakeholder consultation process on plans to develop an expanded oil sands mining operation when it filed a public disclosure document with government officials Thursday.

The proposed project, to be called Voyageur South, would be located north of Fort McMurray on the west side of Highway 63 (about three kilometers southwest of Suncor's existing oil sands operation). Suncor plans to develop the mining operation using new technologies that are expected to improve operational performance while mitigating the impacts of development.

"Suncor is the pioneer of the oil sands industry and that spirit of innovation and leadership is evident in the plans we have outlined today," said Rick George, Suncor's president and chief executive officer. "Investments in new technology are key to ensuring oil sands development provides economic benefits in a responsible manner."

Although several new technologies are proposed for the project, the most significant change planned by Suncor is the use of mobile ore preparation equipment, instead of a truck and shovel mining system. By using this new technology, Suncor expects to reduce noise pollution and air emissions, in particular nitrogen oxides. Compared to truck and shovel operations, the mining technology proposed by Suncor should require a smaller workforce which mitigates the social impact on the community. The smaller mining fleet is also expected to help Suncor better manage the costs of oil sands mining, from road maintenance to fuel expenditures.

Other technologies Suncor may use at the proposed development include new methods to advance tailings reclamation and reduce water inventories, as well as improved heat integration and extraction processes that could improve resource recovery while reducing energy consumption and greenhouse gas emission intensity.

Commercial scale testing of these technologies, including the new mining equipment, is currently underway at Suncor. The results of these assessments, along with information gathered through stakeholder consultation and extensive environmental and socio-economic impact studies, will be reflected in the final project plan submitted to regulators.

"We recognize the current pace of development in the oil sands region is exerting significant pressures on the community and environment and we will work closely with stakeholders to address and minimize those impacts," said George. "Our work has only just begun, as we continue to refine these technologies with a goal of advancing the oil sands industry while minimizing the footprint of development."

Suncor expects to file an application to develop the project in mid-2007. Pending regulatory approval, Suncor plans to begin construction in 2009, with operations beginning in 2011. Suncor is targeting production of approximately 120,000 barrels of bitumen per day from the project, which is expected to have an operational life of approximately 40 years. Preliminary capital costs for the development will be submitted with the project application.

The bitumen produced at the proposed project, along with the bitumen feed from other Suncor mining and in situ operations and third-party supply, is expected to provide feedstock flexibility for the company's upgrading facilities, which are planned to produce 500,000 to 550,000 barrels of crude oil per day in the 2010 to 2012 timeframe. The increased bitumen supply is also expected to form the foundation for potential future increases in crude oil production beyond 2012.

"Suncor continues to pursue a path of responsible, staged growth. While we remain focused on our plans to increase oil sands production to the half million barrel per day mark, we're also taking steps to ensure continued growth beyond that milestone. Oil sands mining and in-situ developments are aimed at ensuring our upgrading operations receive a steady bitumen supply to achieve those production goals," said George.

Suncor Energy Inc. is an integrated energy company headquartered in Calgary, Alberta. Suncor's oil sands business, located near Fort McMurray, Alberta, extracts and upgrades oil sands and markets refinery feedstock and diesel fuel, while operations throughout western Canada produce natural gas. Suncor operates a refining and marketing business in Ontario with retail distribution under the Sunoco brand.


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