Canada's Suncor to install cogeneration units at oil sands plant for C$1.4 billion
Posted on 10th Sep 2019
CALGARY, Alberta (Reuters) - Suncor Energy Inc (SU.TO), Canada’s second-largest oil sands producer, will invest C$1.4 billion ($1.06 billion) to install two cogeneration units at its Oil Sands Base Plant, reducing greenhouse gas emissions by 25%, the company said on Monday.
FILE PHOTO: Suncor Energy facility is seen in Sherwood Park, Alberta, Canada August 21, 2019. REUTERS/Candace Elliott
The natural gas-fueled cogeneration units will replace coke-fired boilers and provide steam generation for Suncor’s bitumen extraction and upgrading operations, as well as 800 megawatts of power to be transmitted to Alberta’s electricity grid.
The Base Plant in northern Alberta is Suncor’s largest oil sands project, producing 357,000 barrels per day of synthetic crude from its two upgraders.
“We’re trying to reduce the greenhouse gas emissions in every barrel we produce and this is a big step forward,” Suncor Chief Executive Mark Little told Reuters in a phone interview.
Suncor already transmits about 450 megawatts to the Alberta grid from its existing cogeneration units and the Base Plant project will nearly triple that contribution, Little said.
The project will provide low-carbon power equivalent to displacing 550,000 cars from the road, Suncor said in a statement.
Suncor is aiming for a C$2 billion ($1.5 billion) increase in free funds flow by 2023 and Little said the cogeneration project would generate just over 10% of that through lowering oil sands operating costs and sustaining capital costs.
It will also cut Base Plant sulphur dioxide emissions by 45% and nitrogen oxide emissions by 15%.
Cogeneration uses natural gas to produce both industrial steam and electricity. A number of other oil sands producers including Cenovus Energy Inc (CVE.TO) and MEG Energy Corp (MEG.TO) also use it to power their operations.
($1 = 1.3161 Canadian dollars)
($1 = 1.3163 Canadian dollars)
Reporting by Nia Williams; Editing by Peter Cooney
Suncor Energy to invest $1.4 billion in low-carbon power cogeneration at its Oil Sands Base Plant
All financial figures are in Canadian dollars
Delivers superior returns and a significant contributor to the company’s goal of growing incremental free funds flow by $2 billion by 2023
Suncor’s greenhouse gas (GHG) emissions associated with steam production at Base Plant will be reduced by approximately 25%
GHG emissions in the province of Alberta will be reduced by approximately 2.5 megatonnes per year
CALGARY, Alberta, Sept. 09, 2019 (GLOBE NEWSWIRE) -- Suncor today announced it is replacing its coke-fired boilers with two cogeneration units at its Oil Sands Base Plant. The cogeneration units will provide reliable steam generation required for Suncor’s extraction and upgrading operations and generate 800 megawatts (MW) of power. The power will be transmitted to Alberta’s grid, providing reliable, baseload, low-carbon power, equivalent to approximately 8% of Alberta’s current electricity demand. This project will increase demand for clean natural gas from Western Canada.
“This is a great example of how Suncor deploys capital in projects that are economically robust, sustainability minded and technologically progressive,” said Mark Little, president and chief executive officer. “This project generates economic value for Suncor shareholders and provides baseload, low-carbon power equivalent to displacing 550,000 cars from the road, approximately 15% of vehicles currently in the province of Alberta.”
The project cost is estimated to be $1.4 billion, delivering a high teens return and projected to be in-service in the second half of 2023. This project will substantially contribute to the company’s goal of an increased $2 billion in free funds flow by 2023. This will be achieved through Oil Sands operating cost and sustaining capital reductions along with margin improvements. It will also contribute materially to Suncor’s publicly announced GHG goal.
Replacing the coke-fired boilers with cogeneration will reduce GHG emissions associated with steam production at Base Plant by approximately 25%. It is also expected to reduce sulphur dioxide and nitrogen oxide emissions by approximately 45% and 15% respectively. The cogeneration units will eliminate the need for a flue gas desulphurization (FGD) unit, which is currently used to reduce sulphur emissions associated with coke fuel. Decommissioning the FGD unit will reduce the volume of water the company withdraws from the Athabasca River by approximately 20%.
By producing both industrial steam and electricity through a single natural gas-fuelled process, cogeneration is the most energy-efficient form of hydrocarbon-based power generation. Suncor believes this project will contribute to both Alberta and Canada’s climate ambitions.
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