Teck high on oilsands

Photo: Contributed

In a sign that the oilsands mining industry can't be counted out just yet, public hearings into the proposed $20.6-billion Frontier Oil Sands Mine project begin in Fort McMurray, Alta., today.

International oil companies are cutting their oilsands mine investments and many analysts say the long-life returns don't justify the high upfront costs, but Vancouver-based Teck Resources Ltd. says it is committed to its megaproject which could be producing oil by 2026.

"We believe the long-term outlook for the global oil market is favourable for projects like Frontier," said Doug Brown, Teck's director of public affairs, reached in Fort McMurray on Monday.

"Given the current project timing, and the future demand we see, we think it's a strong project to move ahead."

Teck's pursuit of regulatory approval of Frontier is a rare positive sign for oilsands mining, said Kevin Birn, vice-president of North American crude oil markets for IHS Markit.

"The regulatory process is not a cheap process so this is a good indicator for the sector," he said.

The oilsands industry slowdown of the past four or so years means that Teck should find construction and operating costs will be lower than during the boom years and they should be able to integrate the latest and most efficient technologies into Frontier, if it is approved and sanctioned, he said.

Still, the company's estimates suggest the strip mine project will cost about $80,000 per flowing barrel of oil, which is much higher than the $40,000 to $50,000 estimated to build a new steam-driven thermal oilsands project, Birn said.

Teck is scheduled to kick off the hearings today before a joint review panel of the Alberta Energy Regulator and Canadian Environmental Assessment Agency, with the rest of the week devoted to cross-examination by interveners.