Suncor Energy's Board gives final approval to $20.6 billion oil sands expansion



    (All financial figures are approximate and in Canadian dollars unless
    otherwise noted.)

    CALGARY, Jan. 30 /CNW/ - Suncor Energy announced today that its Board of
Directors has given final approval to a $20.6 billion investment that is
expected to boost crude oil production at the company's oil sands operation,
located north of Fort McMurray, by 200,000 barrels per day (bpd).
    The Board's decision is a key step in achieving Suncor's long-term goal
of responsibly increasing crude oil production capacity to 550,000 bpd in 2012
- and follows through on a growth strategy that Suncor first announced in
2001.
    "Our long term growth strategy called for us to double our business and
now, with the Board's support, we're constructing an expansion project that is
thoroughly planned and engineered," said Rick George, Suncor's president and
chief executive officer. "The years of pre-work leading up to this point will
also help us deliver another commitment to our stakeholders - that we would
work to ensure all future growth is completed in a safe, reliable and
environmentally responsible manner."
    The expansion plans include constructing four additional stages of
in-situ bitumen production, a new upgrader (Suncor's third) to convert that
bitumen into higher-value crude oil, and various infrastructure and utilities.
    "Suncor's business has historically relied on oil sands mining. This
expansion puts in-situ development on a more equal footing to our mining
operations and proves again how investments in new technologies can enable
business to grow, while also allowing us to reduce our environmental
footprint," said George. Suncor's in-situ operations disturb only about 15% of
land, as compared to oil sands mining and more than 90% of the water needed
for the process is recycled.
    Of the estimated total of $20.6 billion, Suncor has already invested
approximately $2.5 billion on the expansion, including detailed engineering,
site work and fabrication of major vessels. In addition, Suncor's consultation
with stakeholders has resulted in a project designed to mitigate many of the
environmental impacts oil sands development creates.
    One area of particular focus is improved water management. Having already
reduced water withdrawals from the Athabasca River, Suncor plans to proceed
with this expansion without requesting any increase to its water licence. The
project also calls for emission abatement equipment and sulphur handling
systems to be installed to improve air quality and reduce odours, while new
equipment and processes are also in the plan to improve energy efficiency.
    "Suncor strives to combine strong financial results with equally robust
environmental performance," said George. "We believe this latest investment
marks an exciting new chapter for our company as we invest in both expanding
our business and working to improve our environmental performance."
    The expansion is designed to be completed in a phased manner. Mechanical
completion of the new upgrader is expected to be completed in 2011, while
bitumen feed from the new stages of in-situ production is expected to begin
operation in 2009 through 2011. Crude oil production is expected to begin
ramping up in late 2011, with full production capacity of 550,000 bpd expected
to be achieved in 2012. Suncor's plans for some components of in-situ
expansion are still subject to regulatory approval and, as such, the company's
schedule is subject to change.
    The capital required to fund the expansion is expected to be financed
through cash flow from operations, credit facilities and access to debt
capital markets.
    "While we are firmly committed to our growth plans, we're also placing a
strong focus on the efficiency and productivity of our existing operations,"
said George. "How we perform on safety, reliability, operational costs and
environmental performance sets the foundation for what our stakeholders can
expect in the future."

    Background information
    ----------------------
    - For more information see www.suncor.com/presentations.

    Project Overview

    The $20.6 billion investment (estimate accuracy range of +14/-10%)
approved by Suncor's Board of Directors is expected to deliver an integrated
expansion to boost production capacity to 550,000 bpd in 2012 from the current
planned expansion of 350,000 bpd.
    Bitumen Supply - An investment of approximately $9 billion (with an
estimate accuracy range of +16%/-13%) is to be made to construct four stages
of in-situ production. Each stage is expected to produce an average of
approximately 68,000 bpd of bitumen. (Depending on certain operational and
market conditions, excess bitumen may be sold to market as a heavy crude
blend.)
    Upgrading - An investment of approximately $11.6 billion (with an
estimate accuracy range of +12%/-8%) will go towards construction of an
upgrader designed to process 245,000 bpd of bitumen into 200,000 bpd of crude
oil. The product slate is expected to consist of approximately 85% sweet crude
oil and diesel, and 15% sour crude oil. Oil products are planned to be shipped
to market through third-party and Suncor-owned pipelines.
    The cost estimates above include investments in infrastructure including
pipelines, camps, administration facilities, cogeneration, tank farms and an
interchange on Highway 63 to enable safe traffic flow. Expansion plans include
integration with existing operations to allow for improved efficiency and
flexibility.
    The cost estimates above do not include expenditures associated with
commissioning and start-up of the new facilities. Currently, this is estimated
at $820 million (with an estimate accuracy range of +15%/-10%).
    At peak construction in 2009 to 2010, the expansion is expected to
temporarily employ approximately 7,800 people. On completion, the expansion is
expected to create about 800 new permanent jobs.
    Suncor recognizes the environmental challenges of growth are significant
and the company is committed to taking action to ensure development proceeds
in a responsible way:

    
    -   Water - Suncor has reduced water use per barrel by nearly 50% during
        the past five years. With this expansion program, the company plans
        to spend $225 million to further improve water management. As a
        result of plans to reduce water consumption and increase treatment
        and recycling, the company did not seek an increase in its water
        licence for the construction or operation of its planned third
        upgrader. In Suncor's in-situ operations, more than 90% of the water
        used for steam generation is expected to be recycled.

    -   Land - This growth program invests significantly in an expansion of
        in-situ operations, which use only about 15% of the land normally
        disturbed by oil sands mining and do not produce tailings. In the
        development phase, Suncor plans to use new technology to reduce the
        impact of seismic lines. Suncor is also undertaking integrated land
        management practices with neighboring companies and industries to
        reduce the cumulative effect of resource development.

    -   Air - Suncor has reduced greenhouse gas emission intensity at its oil
        sands plant by approximately 50% compared to 1990 levels. While this
        expansion will lead to an increase in absolute greenhouse gas
        emissions, the company continues to investigate technologies such as
        carbon capture and storage that hold the potential for reducing
        absolute emissions in the longer term. The company also continues to
        target technologies to reduce intensity in other emissions. For
        example, approximately $800 million is being spent to reduce sulphur
        dioxide emissions through the construction of a new sulphur plant.
        Improvements in emissions of nitrogen oxides are also expected and
        Suncor will continue to investigate gasification options, which could
        enable the company to turn petroleum coke, an oil sands by-product,
        into a clean energy source. Investments in new equipment and
        processes are also expected to mitigate operational odours.
    

    This news release contains forward-looking statements that address goals,
expectations or projections about the future. These statements are based on
Suncor's current goals, expectations, estimates, projections and assumptions,
as well as its current budgets and plans for capital expenditures. The
forward-looking statements may be identified by the words "expected", "goal",
"strategy", "called for", "plans", "strives", "believe", "should",
"estimates", "enable" and "target". These statements are not guarantees of
future performance. Actual results could differ materially, as a result of
factors, risks and uncertainties, known and unknown, to which Suncor's
business is subject. These could include: changes in general economic, market
and business conditions; fluctuations in supply and demand for Suncor's
products; fluctuations in commodity prices and currency exchange rates; the
impact of stakeholder consultation; the regulatory process; technical issues;
environmental issues; technological capabilities; new legislation; actions by
governmental authorities including the imposition of taxes or changes to fees
and royalties; the occurrence of unexpected events including Suncor's
capability to execute and implement its future plans; and changes in current
plans. Further discussion of the risks, uncertainties and other factors that
could affect these plans, and any actual results, is included in Suncor's
annual report to shareholders and other documents filed with regulatory
authorities.

    Suncor Energy Inc. is an integrated energy company headquartered in
Calgary, Alberta. Suncor's oil sands business, located near Fort McMurray,
Alberta, extracts and upgrades oil sands and markets refinery feedstock and
diesel fuel, while operations throughout western Canada produce natural gas.
Suncor operates a refining and marketing business in Ontario with retail
distribution under the Sunoco brand. U.S.A. downstream assets include pipeline
and refining operations in Colorado and Wyoming and retail sales in the Denver
area under the Phillips 66(R) brand. Suncor's common shares (symbol: SU) are
listed on the Toronto and New York stock exchanges.
    Suncor Energy (U.S.A.) Inc. is an authorized licensee of the Phillips
66(R) brand and marks in the state of Colorado. Sunoco in Canada is separate
and unrelated to Sunoco in the United States, which is owned by Sunoco, Inc.
of Philadelphia.





For further information:

For further information: Media: Brad Bellows at (403) 269-8717;
Investors: John Rogers at (403) 269-8670

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