Sunshine Oilsands delays startup project
Sunshine Oilsands Ltd. is delaying startup of its 5,000-barrel-per-day West Ells thermal oilsands project by a quarter in hopes that costs will fall if it takes more time to get final details right.
In a news release Friday, the company whose stock trades in Hong Kong and Toronto said it expects to begin steaming its wells in June, at least three months later than its previous schedule to begin steaming by the end of this month. First oil is expected to be produced in September.
“There is a potential to take advantage of lower contract and labour costs by spreading West Ells completion and commissioning activities over a longer time period in the softening labour and contracting environment,” the company said in its release.
It didn’t say how much the delay is expected to save, nor did it provide an updated estimate of its cost. In 2013, before it halved its 10,000-bpd project into two 5,000bpd phases, Sunshine estimated it would cost a total of $496 million.
Company executives were not immediately available for comment.
Sunshine added Friday that it expects smoother implementation of electrical systems, instrumentation and programming, more productivity and less concern over timely receipt of licences and municipal permits on a more relaxed timeline.
It said the project is 92 per cent complete and there are between 180 and 200 contractors on site, plus 40 operations personnel. The workforce peaked at about 425 plus operations personnel in January and February, it said.
The company continues to look for joint venture partners or other sources of capital that will allow it to begin planning for its suspended second phase at West Ells, a prospect that it said would allow further cost savings.
Sunshine halted construction at West Ells in the summer of 2013 due to an inability to refill its treasury and restarted it in October after raising $144 million of equity, selling $20 million in non-core assets and closing a $200-million US debt offering.
On Friday, it reported a net loss of $26.8 million in 2014 compared with a loss of $32.8 million for 2013.
The company continues to look for joint venture partners … to begin planning for its suspended second phase at West Ells.