We aim to create sustained economic value from the oil sands resource. This is achieved through ongoing performance improvements and ensuring continued opportunities for stakeholders to share in the benefits of our operations.
Successful company-wide response
to regional wildfire.
Crude oil shipments
increase by 9.5% over previous year.
Annual economic contribution
exceeds $4 billion.
Syncrude is committed to responsible development and management of the oil sands resource. Toward this, we aim to create sustained economic value for our stakeholders and all Canadians. This is achieved through an ongoing focus to improve safety, reliability and environmental performance; reduce operating costs; and ensure opportunity for all stakeholders to benefit from our operations. Indeed, we recognize we are measured on not just the crude oil we produce, but how well we do it.
Syncrude contributed over $4.4 billion to the Canadian economy in 2016 – almost half in the local Wood Buffalo region – through the procurement of goods and services, payment of taxes and royalties, salaries, wages and benefits.
At $2.7 billion, procurement of goods and services comprised the largest portion of our expenditures. This included $183 million with Aboriginal businesses and, representing two-fifths of our annual spend, over $1.1 billion with businesses in the Wood Buffalo region. We spent about $1.5 billion with businesses elsewhere in Alberta and $200 million in the rest of Canada. Of our total annual procurement, 96 per cent was spent in Canada.
Economic contributions also included net payroll costs of $853 million, municipal taxes of $131 million, payroll and corporate taxes of $396 million, and royalty payments of $39 million.
Over the last five years, Syncrude has generated a total economic impact of $34 billion.
On May 3rd, a large wildfire encroached upon Fort McMurray and forced a mandatory mass evacuation of every resident, including most of our employees. About 55,000 residents evacuated to points south, while another 25,000 fled north to oil sands facilities, including Syncrude. The provincial government declared a state of emergency on May 4th and did not allow residents to begin re-entry to the region until June 1st.
The largest wildfire evacuation in Alberta’s history, it initially left only a few hundred employees to maintain operations and care for community residents who arrived for refuge at our site. Health and safety concerns due to smoke and fire eventually led to a complete site evacuation and, on May 7th, we initiated a 24-hour orderly shutdown of our entire operation for the first time in the company’s history.
A small group of employees returned to site on May 9th to assess the facility for restart and, although more workers were bused into the site a few days later, they were again forced to evacuate on May 16th. Critical employees returned to work on May 21st and crude oil shipments began again 44 days later.
An event of this magnitude was unprecedented and our response provided a tremendous learning opportunity for the entire organization. Safety, health and environmental performance was strong throughout, including the regional evacuation, site shutdown and evacuation, and operations startup. There were no significant process safety events, although we disappointed ourselves with one recordable injury and for causing odours in the nearby community of Fort McKay during restart. While IT infrastructure and remote work capabilities for able employees were invaluable, and communications and logistics support proved effective, further efficiencies and coordination opportunities are being explored both internally and with regional emergency responders.
The production impact was around 14 million barrels; however, Syncrude Sweet Premium (SSP) shipments reached 360,000 barrels per day by mid-July and records were achieved for each of the next six months. Production for the year totalled 99.2 million barrels which was our best performance since 2012.
The Syncrude Joint Venture Project underwent significant participant changes during the past year. In February, Suncor Energy acquired the largest participant, Canadian Oil Sands, and then in April obtained an additional stake through its purchase of Murphy Oil’s interest. The structure is currently comprised of Suncor Energy (53.74 per cent), Imperial Oil Resources (25 per cent), Sinopec Oil Sands Partnership (9.03 per cent), Nexen Oil Sands Partnership (7.23 per cent) and Mocal Energy (5 per cent).
On Joint Venture matters each participant holds a vote proportionate to their percentage interest in the Syncrude Project. Most decisions require support from three members representing at least a 51 per cent share in Syncrude. This would include approving Syncrude’s business plan, budget, strategy, most major capital expenditures and executive appointments. A few decisions require unanimous approval.
Syncrude Canada Ltd. remains the operator of the Syncrude Project and is responsible for running the business on behalf of the participants. The Management Services Agreement with Imperial Oil is being maintained while further operations and business synergies are now being pursued with Suncor.
Further information on the structure and oversight of the Syncrude Project can be found in the Corporate Governance chapter.
Syncrude has been recognized among the top 20 corporate research and development spenders in Canada over the past 15 years. Compiled by RE$EARCH Infosource, the list ranks Syncrude in the 17th spot, with expenditures totalling $1.1 billion during the 2001-2015 period. Our company was only one of two oil and gas companies to make the list.
Syncrude environmental technologies related to tailings management, water use and reclamation are published and shared openly through technical journals, conferences and collaborative industry groups such as Canada’s Oil Sands Innovation Alliance (COSIA). As a COSIA member, we have contributed over 290 technical reports and lead 40 Joint Industry Projects.
Collaboration also extends to universities, government agencies, industrial research networks and consortia, private research organizations, and Syncrude Joint Venture Participants. We are also a key stakeholder in a number of Natural Science and Engineering Research Council of Canada (NSERC) Industrial Research Chairs at universities across Canada.
Syncrude filed in late 2014 our regulatory application to develop the Mildred Lake Extension (MLX). The project will sustain bitumen production levels from the North Mine when currently approved Mildred Lake mining areas are depleted and is one of the lowest-cost developments in the oil sands. The application remains under review by the Alberta Energy Regulator and consultations continue with communities of interest. Further information can be found in the Aboriginal Relations and Stakeholder Relations chapters.
Development plans for other leases have been deferred so we can instead focus on continuing efforts to improve efficiency and plant reliability in existing operations. This work should increase production and add near-term value.
|SSP produced1 (million barrels per year)||104.9||97.5||94.2||90.6||99.2|
|SSP produced1 (Mm3 per year)||16.70||15.50||14.98||14.40||15.80|
|SSP produced1 (thousand barrels per day)||286||267||258||248||271|
|Bitumen produced (million barrels per year)||121.2||117.8||111.9||109.0||116.1|
|Bitumen produced (Mm3 per year)||19.3||18.7||17.8||17.3||18.5|
|Bitumen recovery (%)||91.6||91.0||91.2||90.5||90.8|
|Upgrading yield (%)||86.3||85.2||84.9||85.0||86.2|
|Environmental Compliance Incidents3 (#)||12||28||17||24||20|
|Environmental fines ($ million)||04||0||0||0||0|
|Environmental protection orders (#)||0||0||0||1||0|
|Operating costs5 ($ million)||4,704.9||4,749.0||5,263.0||4,368.2||4,081.8|
|Operating costs5 ($ per barrel of production)||44.87||48.73||55.88||48.20||41.15|
|Capital expenditures6 ($ million)||2501.7||3232.7||2036.6||600.2||294.7|
|Research and development expenditures ($ million)7||164.7||189.6||116.9||61.1||68.9|
|SSP selling price ($ per barrel)8||92.29||99.76||99.24||61.27||57.03|
|Average West Texas Intermediate ($ per barrel)||94.12||98.05||93.00||48.80||43.30|
|SSP selling price premium over West Texas Intermediate (%)||-5.5||1.7||6.3||25.6||31.7|
|Revenues8 ($ million)||9,677||9,723||9,346||5,553||5,657|
|Community investment ($ million)||6.0||6.6||6.0||6.1||5.9|
|Royalty payments ($ million)||359||583||669||351||39|
|Government of Alberta carbon payments10 ($ million)||14.36||26.73||19.90||19.73||9.30|
|Payroll and corporate taxes ($ million)||394||382||423||388||396|
|Municipal taxes ($ million)||102||100||113||131||131|
|Purchased energy11 ($ million)||339||392||560||318||261|
|Employees (net) ($ million)||866||849||702||847||853|
|Goods and services purchased ($ million)||5,510||6,289||5,503||3,284||2,735|