An update on Mildred Lake and Suncor's plan to boost reliability at Syncrude

An update on Mildred Lake and Suncor's plan to boost reliability at Syncrude

According to Imperial Oil and Suncor Energy, the Syncrude partners have a plan to improve reliability at Mildred Lake and get the upgrader back to a more normal operating schedule.

Syncrude produced about 180,000 bbl/day of synthetic crude in the third quarter, about half its normal capacity. 

A site-wide power disruption on June 20 resulted in a complete shutdown of all processing units. According to Imperial, all three cokers at the Mildred Lake upgrader were back on-line by the middle of September. The company says Syncrude averaged 212,000 bbl/day for the first nine months of this year. The facility has a design capacity of 350,000 bbl/day. 

The upgrader has suffered through a number of incidents and unplanned maintenance shutdowns in recent years that have dragged on its performance. A naphtha leak sparked an explosion in the spring of 2017, reducing capacity for several months. Just as production returned to normal, another incident in the summer cut output once again through much of July. The upgrader took another two month extended shutdown this past spring to fix a bitumen feed line. 

 

MONTHLY AVERAGE SCO PRODUCTION AT SYNCRUDE (DATA FROM AER)

 

Suncor's plan to improve reliability

Since 2014, Suncor significantly upped its stake in the Syncrude project through the purchase of Canadian Oil Sands, and stakes from partners Murphy Oil and Mocal Energy. Suncor became majority owner in the middle of 2016, now owning 58.74% of the Syncrude project.

The company has since committed to improving reliability at the Mildred Lake upgrader. CEO Steve Williams repeatedly reminds investors that Suncor's upgraders have improved reliability rates to 90% or better in recent years. 

From a technical perspective, the two upgrading facilities have significant differences. Syncrude uses three fluid cokers, while Suncor uses delayed cokers, which are considerably simpler in design. Nonetheless, Suncor says it has been "actively involved" in Syncrude’s reliability improvement plan, sharing best practices. The company plans to temporarily transfer almost a dozen of its own employees to Syncrude, to share "operational discipline learnings" from both a technical and management perspective.

Connecting the two facilities

In order to boost utilization rates, Suncor would like to build two bi-directional pipelines connecting Syncrude and its base plant operations. One line would be designed to carry sour synthetic crude from Suncor's upgraders to Mildred Lake, presumably for additional hydrotreating. The other line would ship bitumen from Syncrude to Suncor's upgraders, for use when Mildred Lake is fully or partially offline.

The two 15 km pipelines are expected to cost about $200 million, with an estimated in-service date of 2020. 

Suncor says it would like to get reliability over 90% and cash costs below $30 a barrel. Upgrader utilization rates at Syncrude were just 52% in the third quarter and 71% in 2017. Full year 2017 operating costs averaged about $44 a barrel.

Imperial CEO Rich Kruger says the Syncrude partners are working to finalize commercial agreements for the piping connection and integration of the two facilities.

Imperial Oil owns 25% of the Syncrude project.

UPGRADER UTILIZATION RATES - SUNCOR BASEPLANT VS SYNCRUDE (COURTESY SUNCOR ENERGY)

SYNCRUDE PARTNERS (COURTESY SYNCRUDE)

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