Finance, Operations and Resource Management

Chapter 5.1

Finance, Operations and Resource Management

    Performance Highlights:

    • 94.2 million barrels of crude oil shipped; below expectations due to reliability and maintenance issues
    • $3.8 billion Mildred Lake Mine Replacement project completed on time and under budget
    • Syncrude recognized among Canada's top 20 Innovation Leaders 2014

    Our Approach

    Syncrude is obligated by Canadians to manage our operations in a responsible and efficient manner that extracts sustained economic and societal value from the oil sands resource. This is accomplished through a continued focus on improved safety, reliability and environmental performance, and reduced unit costs. We recognize we are measured on not just how much crude oil we produce but, more importantly, how well we do it.

    Bitumen Recovery

    50 Years of Innovation

    Syncrude celebrated its 50th anniversary in 2014. Established in 1964, the company focused on research and development leading to the start of operations in 1978. Today, Syncrude is one of the largest producers of crude oil from the oil sands with total production exceeding 2.6 billion barrels. Syncrude’s leases are one of the highest-yielding sources of oil in Canada’s history.

    Cost Savings Identified for 2015

    To address the realities of low oil prices while preserving opportunities for long-term success, an internal taskforce was formed in 2014 to study overall spending and develop a cost reduction strategy. We identified significant savings from the 2015 budget with no planned layoffs for permanent Syncrude employees nor impacts on production. Savings will be realized from a combination of spending cuts, spending deferrals and efficiencies from operating, development and capital expenditures. Safety, reliability and meeting regulatory requirements remain top priorities.

    Syncrude is one of the top 20 spenders on research and development in Canada.

    One of Canada’s Top R&D Companies

    Syncrude operates the oil sands industry’s only dedicated research and development (R&D) centre. We invested $107 million in 2014 to pursue new technologies and processes and were recognized as one of the top 20 R&D spenders in Canada.

    Our program focuses on improving the reliability and capacity of our operation, reducing costs and addressing environmental issues. In fact, over half of our research expenditures are directed to projects that will improve environmental performance.

    Syncrude has received over 150 Canadian and U.S. patents for our technology developments. Technologies related to tailings management, water use and reclamation are published and shared openly through collaborative industry groups such as Canada’s Oil Sands Innovation Alliance (COSIA). We also collaborate with entities that offer resources unavailable in our own research centre. These include universities, government laboratories and agencies, industrial research networks and consortia, private research organizations, and our Joint Venture owners. Syncrude has also provided financial and in-kind support for the following Natural Science and Engineering Research Council of Canada (NSERC) industrial research chairs at universities across Canada:

    • Oil Sands Engineering (University of Alberta)
    • Pipeline Transport Processes (University of Alberta)
    • Forest Land Reclamation (University of Alberta)
    • Intelligent Sensing Systems (University of Alberta)
    • Control of Oil Sands Processes (University of Alberta)
    • Oil Sands Tailings Water Treatment (University of Alberta)
    • Hydrogeological Characterization of Oil Sands Mine Closure Landforms (University of Saskatchewan)
    • Mine Closure Geochemistry (University of Saskatchewan)
    • Fluid Coking Technologies (Western University)

    Updates on key research activities are included throughout this report, specifically in the chapters related to  land use, biodiversity, water use, and tailings management

    Research and Development Expenditures

    Major Project Completed Under Budget

    The $3.8-billion Mildred Lake Mine Replacement (MLMR) project was completed on-schedule and under-budget, positioning Syncrude for decades of continued production. The project incorporates two new mine trains and is anticipated to increase production reliability and reduce maintenance requirements. As well, new Syncrude-patented wet crushing technology has been incorporated to improve bitumen recovery.

    As of the end of the year, construction was 97 per cent complete on the $1.9-billion tailings centrifuge plant. It will dewater fluid fine tails (FFT) and produce a clay-rich soil material that can be used in the reclamation of former mine areas. Start-up is planned for 2015.

    Research and development projects continue to focus on improving bitumen recovery rates, which are directly linked to energy efficiency and responsible resource extraction.

    The Mildred Lake Mine Replacement project uses Syncrude-patented technology to increase bitumen recovery from oil sand.

    Future Development Plans

    We will be focused for the next number of years on improving operational efficiency to take full advantage of our production capacity. Our owners believe this approach is the best opportunity to add near-term value.

    The Aurora South mine leases will now likely remain undeveloped until the early 2020s or later. We are instead proposing to develop the Mildred Lake Extension (MLX) project to sustain bitumen production levels upon depletion of the currently approved Mildred Lake mining area. A formal regulatory application was filed in late 2014.

    Operations Summary

    2010 2011 2012 2013 2014
    Crude oil production1
    Millions of barrels per year
    2010 2011 2012 2013 2014
    107.0 105.2 104.9 97.5 94.2
    Thousands of barrels per day
    2010 2011 2012 2013 2014
    293 288 286 267 258
    Millions of cubic metres per year
    2010 2011 2012 2013 2014
    17.01 16.70 16.70 15.50 14.98
    Realized SCO selling price
    ($ per barrel)4
    2010 2011 2012 2013 2014
    80.53 101.20 91.90 99.55 99.24
    Average West Texas Intermediate ($ per barrel)4
    2010 2011 2012 2013 2014
    79.61 95.11 94.15 98.05 92.91
    Total operating costs2
    Millions of dollars
    2010 2011 2012 2013 2014
    4,040.2 4,344.4 4,428.7 4,379.8 4,845.9
    $ per barrel of production
    2010 2011 2012 2013 2014
    37.74 41.28 42.24 44.94 51.55
    Expenditures and revenue
    Capital expenditures3
    (millions of dollars)
    2010 2011 2012 2013 2014
    1,376.7 1,477.4 2,501.7 3,232.6 2,036.6
    Research and development expenditures (millions of dollars)
    2010 2011 2012 2013 2014
    74.0 92.0 158.2 192.0 107.4
    Revenues4 (millions of dollars)
    2010 2011 2012 2013 2014
    8,655 10,708 9,706 9,703 9,306
    Retained earnings5
    2010 2011 2012 2013 2014
    Bitumen produced
    (million barrels)
    2010 2011 2012 2013 2014
    126.3 125.2 121.2 117.8 111.9
    Bitumen produced
    (million cubic metres)
    2010 2011 2012 2013 2014
    20.1 19.9 19.3 18.7 17.8
    Bitumen recovery (%)
    2010 2011 2012 2013 2014
    90.7 91.7 91.6 91.0 91.2
    Upgrading yield (%)
    2010 2011 2012 2013 2014
    85.8 85.7 86.3 85.2 84.9
    Spills6 (cubic metres)
    2010 2011 2012 2013 2014
    0 0 0 0 0
    Environmental compliance incidents7
    2010 2011 2012 2013 2014
    5 4 17 28 12
    Environmental fines ($ millions)
    2010 2011 2012 2013 2014
    3.2 0 08 0 0
    Environmental protection orders (#)
    2010 2011 2012 2013 2014
    0 0 0 0 0

    1 Production is Syncrude crude oil shipped.

    2 Operating costs are costs related to the mining of oil sands, the extraction and upgrading of bitumen into Syncrude Crude Oil (SCO), and maintenance of facilities; they also include administration costs, start-up costs, research, and purchased energy, but do not include development expenses. There is no generally accepting accounting definition as to what constitutes “Operating Costs.”

    3 Capital expenditures includes development expense related to sustaining capital and growth capital projects. The accounting treatment of certain costs may vary significantly between different producers; some producers may elect to capitalize or defer and amortize certain expenditures that are recorded as an expense by other producers, and may segment “Corporate” costs.

    4 Production of Syncrude Crude Oil (SCO) becomes the property of Syncrude’s Joint Venture owners at point of departure from the Syncrude plant. As the operator, Syncrude does not collect revenue from the sale of crude oil or other products. Selling price and revenue reported here reflects only that of Canadian Oil Sands Limited, a 36.74 per cent owner, grossed up for 100 per cent Syncrude, and is solely meant to provide an indication of performance.

    5 Syncrude’s annual operating and capital expenditures are funded pro-rata by Syncrude’s Joint Venture owners.

    6 Numbers have been restated to reflect only those spills or leaks of hydrocarbons, chemicals, waste water and/or recycle water which were not fully captured nor directed into approved containment or disposal. Releases are reported to the Alberta Energy Regulator (AER) and Alberta Environment and Parks (AEP). During the reporting period, no spills occurred off-lease or into the surrounding environment. In 2014, 150 m3 of clean surface runoff water was discharged into a ditch that connects to a local creek. This water had not come into contact with oil sand or process affected water, and we are confident the release did not enter the creek. A water sample was taken and results were within approved regulated limits.

    7 An Environmental Compliance Incident is a failure, equipment bypass, or upset, that results in a numerical limit exceedence or operating without a control device (or a malfunctioning control device) as identified in Syncrude’s Alberta Environmental Protection and Enhancement Act (EPEA) Operating Approval. Control devices not in service or malfunctioning were added to this metric in 2012. Data prior to 2012 includes only those incidents of limit exceedences.

    8 In 2012, an administrative penalty of $5,000 was paid to the Government of Alberta for failure to sufficiently report the release of emissions due to an isolated on-site sour water leak in July 2010.

    Note: These figures may differ from those reported by any of the Joint Venture participants due to differences in reporting conventions and methodology.


    Fill out my online form.
    HTML Forms powered by Wufoo.

    Download a PDF of this topic's detailed information

    Download PDF


    Go to the PDF Builder to create your own custom report.

    Go to PDF Builder

    View Next Economic Topic:

    Economic Contribution