STURGEON REFINERY OVERRUN RAISES CONCERNS ABOUT COST ESCALATION, BUT EXECUTION STRATEGY COULD KEEP THE TREND AT BAY By O.H. Markstad on March 13, 2014 “The labour situation is still pretty tight, and so there is still that room for escalation on the labour, but these other strategies that people are deploying are kind of helping to manage costs,” she says. The Dundee analysts also say that there is a tightening market for labour and productivity, but cost inflation is still under control. Shortages are likely to loom in 2015-16, but there are mobile workers that can help ease the tension. In late 2013, the partners in the Sturgeon Refinery—Canadian Natural Resources Limited and North West Upgrading Inc.—reported an increase to their capital cost estimate from $5.7 billion to $8.5 billion, “renewing memories of the frequent cost overruns witnessed in the oilsands industry during the past two oilsands booms,” write Raymond James Ltd. analysts Chris Cox and Matthew Murphy. And at Fort Hills, which is projected to cost a total of $15.1 billion when complete in 2017, Suncor says it will cap field labour, with no more than 5,000–5,500 people on site at any point. “Recall that during the last boom, projects proceeded to the construction phase before engineering work was fully completed, leading to expensive subsequent design modifications and cost overruns,” Maxim Sytchev and Shereen Zahawi wrote in a summary of Dundee’s fifth annual oilsands survey in December.
Posted on: Thu, 27 Nov 2014 23:42:34 +0000
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