Fort Hills Oil Sands Project, Calgary, Alberta, Canada

The Fort Hills project is an integrated oil sands project including a mine (approved in 2002 by Alberta Environment and the Alberta Energy and Utilities Board) and bitumen extraction facility situated 90 miles north of Fort McMurray in Alberta (Athabasca oil sands region). In addition there will be upgrading facilities in Sturgeon County 40 miles north-east of Edmonton (approval is expected in early 2008).

Fort Hills is one of the largest remaining undeveloped oil sands leases in the Athabasca region. The project is being developed by the UTS Energy Corporation (founder of the Fort Hills Energy Partnership) and has approval for the production of up to 190,000bpd of bitumen. The bitumen resource has an estimated 4.7 billion barrels (estimated by Sproule Associates Limited, Oil and Gas Consultants in 2006).

The project partners (Fort Hills Energy LP) include UTS (30%), Teck Cominco Limited (15%) (a mining company) and Petro-Canada (55%). UTS is expanding the scope of the project through a land acquisition programme and exploration. A recent acquisition includes oil sands lease 437 and lease 438 on the east side of the Athabasca River and adjacent to the Fort Hills project (a total of 12,986 acres, which increases the project's land from 46,170 acres to 59,138 acres).

FIRST PRODUCTION PHASE

The first phase (total investment by 2008 will be $2.5bn) is expected to produce 140,000bpd of synthetic crude oil. The project will also produce bitumen (expected to be about 160,000bpd) and will begin in the fourth quarter of 2011 with the first synthetic crude oil coming from the Sturgeon upgrader in the second quarter of 2012.

The estimated investment for the mine and upgrading sections of the project first phase is $14.1bn. Ron Brenneman, Petro-Canada's CEO and president, commented: "This marks a key milestone and a big step forward on the Fort Hills project. The size, staging and technology chosen should provide solid financial returns while minimising execution risk. This step puts us on a path for a final go-ahead project decision in the third quarter of 2008, following the anticipated regulatory approval of the Sturgeon Upgrader in the early part of 2008."

Subsequent phases of the project are expected to give a total of 280,000bpd of synthetic crude oil by 2015 and there is expected to be 40 years of continuing operation.

FORT HILLS CONTRACTORS

In mid-2006 Technip was awarded a services contract including Front-End Engineering and Design (FEED) (completed in mid-2007), detailed engineering, procurement, construction and project management for the primary upgrader, to be constructed in Sturgeon County, Edmonton in Alberta, Canada (environmental impact assessment report filed in 2006).

The project installations include: a Diluent Recovery Unit (DRU), a Delayed Coking Unit (DCU), and related infrastructure. The DRU recovers solvent (naphtha) from the diluted bitumen piped from the Fort Hills mine site in Athabasca to the upgrader. The DCU then upgrades the heavy bitumen into lighter hydrocarbons and then to synthetic crude through coke (carbon) extraction (the siting of the upgrader is close to a refinery in Edmonton). Technip is conducting the project from its Rome base.

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