Under the contract, which has been in place for about 14 years, staff from Imperial were seconded to certain positions at Syncrude and provided people to assist in implementing strategies, while Syncrude remained the day-to-day operator.
On Tuesday, Suncor, which has a 58.74 per cent stake in Syncrude, announced it had agreed in principle with partners Imperial (25 per cent), CNOOC Oil
"Imperial continues to provide operational, technical and business management services to Syncrude under the management services agreement. A transition plan is being developed," Imperial spokeswoman
Suncor and Syncrude recently completed a project to add pipelines connecting Suncor’s Base Plant with Syncrude’s operations. The project is expected to improve efficiency by providing options for each mining and upgrading operation in the event of planned and unplanned production outages.
Switching operatorship at Syncrude is a sign of the evolution of the oilsands mining industry from a high-cost venture with risky, unproven technology to one that's much more proven and predictable, said
He pointed out that when Suncor opened Canada's first oilsands mining project in 1967 and Syncrude followed 11 years later in 1978, there were doubts about whether the remote projects would be successful. Forming partnerships became a way to share the risk.
"When Syncrude started producing in the late '70s, I think it's fair say in hindsight there was a fair bit of technology risk. You know, 'would this really work?'" he said.
The two mining projects have competed with each other for labour and inputs but because the companies involved don't control the price of oil, competition is less intense than it would be in manufacturing, for example, Doucet said.
Since 2016, Suncor has increased its ownership in the Syncrude venture from 12 per cent to 58.74 per cent.
It bought Canadian Oil Sands and its 36.74 per cent stake in 2016, adding
Analysts commenting on the announcement were skeptical about Suncor CEO
"The company believes it can drive average utilization rates to 90 per cent as compared to the five-year average of less than 80 per cent, with only six quarters (of the last 20) exceeding the 90 per cent target," pointed out
He said the cost target would represent a major change compared with Syncrude's five-year average of
CIBC analyst
Suncor says it hopes to realize cost-saving synergies of about
This report by
Companies in this story: (TSX:SU, TSX:IMO)
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