CALGARY, Dec. 12 /PRNewswire-FirstCall/ -- (TSX - COS.UN) - On November 20, Canadian Oil Sands announced that maintenance was underway on Syncrude's Coker 8-2 unit, to repair a large overhead line. Although the overhead line work was completed as planned, restarting the Coker has been challenging. Following more than one week of attempts to restart the Coker, Syncrude has decided that a complete outage of the unit will be required to clean the internal coke deposit before it can be put back into service. Unfortunately, this unscheduled maintenance comes after a run length of only 20 months against a planned run length of 30 months.
Coker 8-2 had been originally scheduled for its next turnaround in Q3/07 to coincide with other important scheduled maintenance that was to be performed. Among these other maintenance items, which needed to be coincident with the 8-2 shut down next fall, were the modifications to the new hydrogen plant steam generation system and a major retrofit of the upper (cyclone) section of Coker 8-2. These items may also necessitate another turnaround in the fall of 2007, again resulting in another short cycle for Coker 8-2. The steam generation system modifications are required to achieve design hydrogen production capacity to, in turn, supply enough hydrogen for the production of SSP, the new synthetic oil product quality that was anticipated earlier as part of the Stage 3 completion.
Although approximately 2 to 3 million barrels of production will be lost during this December and January outage, the impact of these events will not materially affect our production outlooks for the individual 2006 and 2007 calendar years. For this year, we expect that Syncrude will still achieve approximately 8 million barrels in December, which will result in annual production between 94-95 million barrels, 95 million barrels being our most recent outlook. For 2007, the production outlook in our recently announced budget was 110 million barrels and although the Coker 8-2 turnaround should extend until late January, Canadian Oil Sands is maintaining this 2007 production outlook. Canadian Oil Sands provides monthly updates on production volumes on the Trust's website at: http://www.cos-trust.com/asset/ssb_shipments.aspx.
Syncrude also will incur additional costs of approximately $40-$50 million associated with this unscheduled maintenance over the turnaround period, which will result in modest increases in per barrel operating costs in both years. Consistent with past practice, these costs will be expensed in the period incurred.
Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 35.49 percent working interest in the Syncrude Project. Located near Fort McMurray, Alberta, Syncrude operates large oil-sands mines and an upgrading facility that produces a light, sweet crude oil. Canadian Oil Sands is an open-ended investment trust managed by Canadian Oil Sands Limited and has approximately 470.9 million units outstanding, trading on the Toronto Stock Exchange under the symbol COS.UN.
Advisory: In the interest of providing Canadian Oil Sands Trust ("Canadian Oil Sands", "COS" or the "Trust") unitholders and potential investors with information regarding the Trust, including management's assessment of the Trust's future plans and operations, certain statements throughout this press release contain "forward-looking statements". Forward-looking statements in this release include, but are not limited to, statements with respect to: the expected timing and impact of maintenance on Coker 8-2, the expected production in 2006 and in 2007 and the timing to complete the maintenance on Coker 8-2.
You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although the Trust believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: the difficulties and risks involved in any complex mining and upgrading operation; labour disruptions and disputes; and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by the Trust. We would refer you to the risks and assumptions further outlined in the Trust's annual information form and annual and quarterly financial reports.
Canadian Oil Sands Limited
Marcel Coutu
President & Chief Executive Officer
Units Listed - Symbol: COS.UN
Toronto Stock Exchange
