Suncor Energy Files Application to Expand Oil Sands Mining

Suncor Energy filed a regulatory application for plans to expand the company's oil sands mining operations. The planned Voyageur South expansion targets production of approximately 120,000 barrels of bitumen per day. The project is to be located southwest of Suncor's existing operations near Fort McMurray, Alberta.

The regulatory application includes preliminary plans for mining, extraction, tailings storage, utilities and cogeneration facilities, as well as roads, pipelines and other related infrastructure. The application also includes detailed environmental and socio-economic impact analyses and an overview of the consultation process Suncor plans to undertake with stakeholders to help ensure their input is reflected in the project design.

"We believe the project has firm benefits for Suncor and for the regional, Alberta and Canadian economies," said Rick George, president and chief executive officer. "As we work to manage the impacts of industrial development, we're also working to mitigate environmental and social impacts of the project through new technologies."

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.

Regulatory decisions typically require two years from the date of filing, although timing may vary. In the interim, Suncor will continue with stakeholder consultation to better understand and resolve any concerns related to environmental or socio-economic impacts.

"As the first company to commercially develop the oil sands, Suncor has built a strong relationship with stakeholders and a track record of responding constructively to their concerns," said George. "With Voyageur South, we plan to continue to build on that track record."

The application for regulatory approval contemplates beginning site preparation and construction activities in 2009 to 2010, with commissioning and start-up planned between 2011 and 2013. A final schedule for the project is subject to regulatory and Board of Directors approval.

The application includes a preliminary capital cost estimate of $4.4 billion. A firm capital cost estimate will be provided once stakeholder consultation and project engineering have advanced to a point sufficient for final Board of Directors approval.

The bitumen produced at the proposed project, along with 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 have the capacity 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.

Background Information

        -  Preliminary capital cost estimate: $4.4 billion. A firm cost
           estimate will be provided pending final Board of Directors
           approval. According to the socio-economic impact assessment
           completed as part of Suncor's application, approximately 50% of
           the proposed budget would be spent in Alberta and 20% elsewhere in

        -  Production capacity: estimated 120,000 barrels of bitumen per day
           (sufficient to produce about 100,000 barrels per day of synthetic
           crude oil) over a 40-year operational life.

        -  Location: north of Fort McMurray, Alberta, about 3 km southwest of
           Suncor's existing upgrading operations

        -  Workforce: Expected peak construction workforce of approximately
           1,800 contractors (to be housed in Suncor camps). Planned
           operational workforce of approximately 650 on completion.

        -  Expanded mining operations are part of Suncor's long-term bitumen
           supply plans, which also include expanded in-situ development and
           third party supply arrangements.

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