NEW YORK (AP) -- Suncor Energy Inc. said Wednesday that it won't move forward with its troubled Voyageur oilsands upgrader project.
Suncor CEO Steve Williams said market conditions have changed significantly, challenging the economics of the project, the Canadian Press reported. A flood of light crude from places like North Dakota has changed the market in recent years and tilted the field against the massive multibillion-dollar upgrader project that would have transformed heavy crude into a similar product.
"That's why we undertook a thorough review of the project to determine whether it met our criteria for long-term, profitable growth," Williams said in a statement. "This decision is in line with our commitment to capital discipline and our stated plan to allocate capital with priority given to developing higher-return growth projects and accelerating the return of cash to shareholders through dividends and share buybacks."
Suncor is one of the largest operators in the oilsands, with huge mining operations north of Fort McMurray, a 12 percent interest in the Syncrude Canada Ltd. mine, a 41 percent stake in the yet-to-be-developed Fort Hills mine and steam-driven operations at Firebag and Mackay River. The Voyageur upgrader was part of a joint venture that Suncor inked with Total E&P Canada Ltd. just over two years ago.
Suncor said Wednesday that it bought the French company's stake in the upgrader for $515 million Canadian ($506.8 million) to gain full control over the partnership's assets and use them to support its profitable oil sands growth.
Suncor booked a $1.49 billion Canadian write-down on Voyageur in the fourth quarter of 2012. The Calgary, Alberta-based company said it will take a charge to its first-quarter net income of approximately $140 million Canadian, as a result of the decision.