Surmont oil sands project : ConocoPhillips to buy out TotalEnergies’ stake

ConocoPhillips has announced its intention to exercise its preemption right to purchase the remaining 50% stake in the Surmont oil sands project from TotalEnergies EP Canada.

The consideration for the stake is at around $3 billion, and ConocoPhillips will also make contingent payments of up to approximately $325 million over a five-year period.

The Surmont oil sands project is located in the Athabasca region of northeastern Alberta, close to Fort McMurray, and has been in production since 2007.

Currently, ConocoPhillips holds a 50% interest as the operator of the Surmont project and will become the sole owner upon completion of the transaction.

ConocoPhillips to buy out TotalEnergies’ 50% stake in the Surmont oil sands project

The deal is subject to regulatory approvals and customary closing conditions and is expected to be finalized in the second half of 2023.

TotalEnergies, in line with its low-carbon strategy, had previously announced its intention to exit Canadian oil sands and spin off TotalEnergies EP Canada in 2023.

In January 2023, TotalEnergies EP Canada exercised its preemption right to acquire an additional 6.65% interest in the Fort Hills Energy Limited Partnership from Teck Resources Limited. The consideration for this acquisition was CAD 312 million ($229 million).

TotalEnergies EP Canada currently holds a working interest of 24.58% in the Fort Hills oil sands project and will increase its stake to 31.23% after the completion of the transaction.

Additionally, in April 2023, TotalEnergies accepted an offer from Suncor Energy for the sale of its oil sands assets in Canada. The deal includes TotalEnergies’ remaining working interest in the Fort Hills project and its working interest in the Surmont oil sands project.

The agreement involves a cash payment of CAD 5.5 billion ($4.04 billion) at closing, with the potential for additional payments up to CAD 600 million ($441 million) under certain conditions. The transaction requires the waiver of TotalEnergies EP Canada’s partners’ preemption rights and customary closing conditions.

Details of the Surmont oil sands project

The Surmont oil sands project is a prominent oil extraction and production endeavor. Utilizing advanced oil sands mining and extraction techniques, the Surmont project recovers bitumen, a heavy form of crude oil found in the oil sands deposits. The extraction methods employed include open-pit mining and steam-assisted gravity drainage (SAGD), an in situ technique.

The extracted bitumen undergoes further processing to transform it into a lighter, synthetic crude oil, which can then be refined into various valuable petroleum products.

Since its commencement in 2007, the Surmont project has demonstrated impressive operational capacity. It incorporates state-of-the-art technologies and sustainable practices to ensure efficient extraction while minimizing environmental impact. These include the utilization of steam injection for in situ extraction, innovative water recycling systems, and comprehensive measures to reduce greenhouse gas emissions and preserve water resources.

As a key player in Alberta’s oil sands industry, the Surmont oil sands project significantly contributes to Canada’s overall oil production and the thriving energy sector.

In conclusion, the Surmont oil sands project stands as a remarkable example of sustainable and technologically advanced oil extraction, bolstering the development and growth of the oil sands industry in Alberta, Canada.