Canadian Oil Sands focuses on four strategic areas.
Canadian Oil Sands takes a long-term view in setting our financial plan, reflecting the nature of our long-life asset. We value maintaining a strong balance sheet to preserve our investment grade credit ratings, support our business through the commodity price cycle and provide capacity to finance growth opportunities. Our approach to efficient capital management means that distributions will be considered in the context of financial and operating performance, capital expenditures, growth opportunities, as well as planning for trust taxation.
2008 Progress
- Maintained net debt level under $1 billion with year-end net debt to total capitalization of 20% and $840 million of available liquidity from bank credit facilities
- Reported net income of $1.5 billion ($3.17 per Trust Unit)
- Reached cash from operating activities of $2.2 billion ($4.66 per Trust Unit)
- Achieved return on average productive capital employed of 34%
- Paid out $1.8 billion, or $3.75 per Trust Unit, in distributions – an increase of 127% over 2007
- Reduced fourth quarter 2008 distribution in response to declining crude oil prices and credit market conditions
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2009 Plan
- Preserve liquidity and financial flexibility under current difficult economic conditions
- Maintain prudent financial leverage in the context of cash from operating activities, capital requirements and quarterly distributions
- Refinance $500 million of maturing bonds in the debt capital markets or through our $840 million of credit facilities
- Achieve a return on average productive capital employed of 6%
- Reinstate Premium Distribution, Distribution Re-Investment and Optional Unit Purchase Plan (DRIP) to preserve balance sheet equity and provide investors with options to manage their distributions
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Beyond 2009
- Increase net debt to $1.6 billion to set an efficient capital structure beyond 2011, if prudent in light of market conditions
- Establish the best structure for Canadian Oil Sands’ investors post 2010, which at this time appears to be conversion to a corporation
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Syncrude Canada Ltd. is the operator of the Syncrude Project. Imperial Oil, a 25% owner of the project, supports Syncrude Canada by providing expertise, systems and people under a Management Services Agreement. Canadian Oil Sands works with Syncrude and its joint venture owners to set the strategic direction for the project and approve significant operational and strategic decisions.
2008 Progress
- Completed a maintenance program that included two coker turnarounds and hydrogen plant modifications
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Production of 289,000 barrels per day was below plan of 315,000 barrels per day, largely due to challenges in the reliability of the mining and upgrading operation and the disruption in operations in Q1 2008
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Syncrude’s owners reached an agreement with the Alberta government on new Crown royalty transition terms, and elected to convert to a bitumen-based royalty
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A fatality occurred at the Syncrude site. Syncrude’s total recordable injury rate in 2008 was 0.59 for every 200,000 hours worked, compared with a rate of 0.70 recorded in 2007 |
2009 Plan
- Complete a turnaround of Coker 8-3, including implementing modifications to reduce coke build-up within the vessel
- Complete turnarounds on the LC-Finer and Vacuum Distillation Unit
- Increase bitumen supply by accelerating overburden removal and improving reliability of the mining and extraction processes
- Continue to focus on worker safety with more emphasis on hazard recognition
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Beyond 2009
- Establish sustained design capacity rates of 350,000 barrels per day
- Relocate mining trains
- Examine if there is a solution to recover ammonia produced on-site in the operation of our flue gas desulphurizer
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Near-term production growth is expected as Syncrude ramps up to its facility’s current design capacity. Syncrude has plans to grow production to more than 500,000 barrels per day (184,000 barrels per day net to the Trust). Canadian Oil Sands will evaluate opportunities to grow our interest in the oil sands through consolidation of Syncrude interests and acquisition of other assets.
2008 Progress
- Syncrude’s owners approved proceeding with scoping engineering work for the Stage 3 debottleneck and subsequent expansion stages
- Continued to better define the resource estimates on Syncrude’s leases, particularly the Aurora South leases
- Evaluated opportunities to acquire additional oil sands interests, but did not identify an opportunity worth pursuing
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2009 Plan
- Proceed with the design and scoping engineering work for Syncrude’s future expansion phases
- Evaluate opportunities that may arise to purchase additional interests in the Syncrude Project or other oil sands assets
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Beyond 2009
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Expand bitumen production capacity through construction of more robust mining train systems as part of mining train relocations
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Establish timing and cost estimates for the Stage 3 debottleneck and subsequent expansion phases to proceed to project sanctioning by Syncrude owners |
Sustainable growth remains a key objective for Syncrude. We recognize our operations have an impact on communities, the environment and the Canadian economy and we are committed to managing our operations in an environmentally and socially responsible manner.
2008 Progress
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2009 Plan
- Respond to provincial and federal charges resulting from the death of waterfowl at the Aurora settling basin in 2008, and improve waterfowl deterrent mechanisms
- Continue to foster a more balanced discussion with the public on Canada’s oil sands and identify ways to improve performance towards sustainable development
- Continue to invest at the Syncrude level to support projects and organizations focused on enhancing the quality of life in local communities
- Spend $409 million ($150 million net to the Trust) on the Syncrude Emissions Reduction project
- Explore the viability of developing a large scale carbon capture and storage system through participation in the Integrated CO2 Network (ICON)
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Beyond 2008
- Collaborate with other oil sands producers to develop new technologies to improve the effectiveness of tailings systems
- Construct a pilot project for new tailings management technology
- Complete the Syncrude Emissions Reduction (SER) project, which should lead to a 60% reduction in sulphur dioxide emissions from 2008 approved levels
- Implement further measures to reduce energy intensity, thereby reducing operating costs and carbon dioxide emissions
- Explore new technologies and better practices to reduce our impact on the environment
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