81.4 Million Barrels in 2001: Syncrude sets a new production record
$2 billion in capital spending
FORT McMURRAY, AB - Syncrude Canada Ltd. brought 2001 to a close by setting its 19th production record in 23 years - 81.4 million barrels (223,000 barrels per day). Although below plan, it was a 10% increase over year 2000 production. New records were established for daily, weekly and monthly production. The company also recorded its best ever safety performance during the year.
"It was a year of challenge and achievement," said Syncrude Chairman and CEO Eric Newell. "We faced many operational issues, yet effectively managed them with the result being greatly improved production in the final weeks of the year." Syncrude President and COO Jim Carter added, "Our production achievements really were hard-won and they underscored the tremendous employee effort that went into improving the operation. We've undertaken substantial maintenance work and overcome start-up issues with our new technology at the Aurora mine. All the while, employees and contractors have maintained an incredibly safe workplace. We're very proud that we've achieved our best ever safety record in 2001."
Cost per barrel of production for the year was $18.47, higher than the third quarter outlook of $18.00 and year 2000 unit costs of $17.20. This was due to the increased scope of maintenance work completed during the year, higher purchased energy (natural gas) costs, ore processing and start-up issues encountered at the Aurora mine, and production volumes that were below target.
Fourth quarter unit operating costs, at $15.86 per barrel, were a substantial improvement over prior quarters, primarily as a result of operating improvements at the Aurora Mine and completion of repairs to a vessel in the LC Finer operating unit.
Capital expenditures in 2001 were $828 million, versus $510 million in 2000. This increase was primarily due to engineering, design and procurement for the Stage 3 expansion projects and additional maintenance capital for the base plant operation.
Operating costs for the year 2002 are expected to be in the range of $16.50 - $17.50 per barrel, reflecting increased production and a strong focus on operating reliability and cost reduction.
Safety performance by Syncrude employees and contractors working at the site was exceptional in 2001. Syncrude has one of the best safety records in the mining and petroleum industries. In 2001 contractors and employees had a combined lost-time injury rate of 0.15 for every 200,000 hours worked, an improvement over the 2000 rate of 0.17 and considerably lower than the Alberta average of 3.4.
Beyond record annual shipments, two additional records were set. December recorded new highs of 2.04 million barrels for weekly shipments, and 7,804,000 barrels for monthly production.
Major factors in the year's production coming in below the original target of 90 - 94 million barrels included a five-month outage of the LC Finer for vessel repairs, a shutdown of the Vacuum Distillation Unit and an outage of the Gas Turbine Generator at the Aurora mine. Design improvements at the Aurora mine were also implemented. This work led to very encouraging production outcomes in the fourth quarter. Overall plant condition has improved significantly and confidence is high that steady-state operations can be maintained in 2002.
Syncrude's purchases of goods and services totalled $1.5 billion in 2001, representing a significant contribution to the economies of Alberta and Canada. A full 94% of these purchases were made in Alberta. Contracts to Aboriginal owned businesses totalled a record $92 million in 2001.
Syncrude 21 Program - Capital Investment
In July, the Owners of the Syncrude Joint Venture approved more than $4 billion to proceed with Stage 3 of the Syncrude 21 capital expansion program. Stage 3 comprises a major expansion to Syncrude's Mildred Lake Upgrader, as well as a second production train at the Aurora mine. It will increase production of Syncrude Sweet Blend by more than 100,000 barrels per day. By 2005, Syncrude will produce about 360,000 barrels per day. New technology being incorporated into the project will also deliver a large improvement in environmental performance; nearly $900 million will be invested in technologies to increase energy efficiency, reduce atmospheric emissions and increase the amount of oil produced per tonne of oil sand processed.
Total capital expenditures for 2001 were $828 million. For 2002, planned expenditure for the Syncrude 21 suite of projects is more than $2 billion with approximately $1.75 billion planned for the engineering, procurement and construction of the Stage 3 project.
SYNCRUDE JOINT VENTURE OPERATING RESULTS
The Syncrude Project is a joint venture operated by Syncrude Canada Ltd. and owned by AEC Oil Sands, L.P., AEC Oil Sands Limited Partnership, Canadian Oil Sands Investments Inc., Conoco Oil Sands Partnership, Imperial Oil Resources, Mocal Energy Ltd., Murphy Oil Company Ltd., Nexen Inc. and Petro-Canada Oil and Gas.
Trading Symbols for Public Syncrude Joint Venture Owners:
Certain information contained in this news release constitutes forward looking statements, including expectations of future production and operating and capital expenditures. Actual results may vary from those anticipated due to many factors including changes in business strategy, crude oil prices, the Canadian/US currency exchange rate, industry conditions, the timing of capital expenditures, the availability and prices of goods and services as well as government regulations and operating risks.