Despite a $66 million investment to build a massive wind farm with oilsands partner Suncor Energy Inc. (TSX:SU), Teck Resources Ltd. is staying mum about its oil projects in Wild Rose Country.
The Vancouver-based diversified mining giant (TSX:TCK.A,TCK.B) has a 20% stake in the Fort Hills Energy Ltd. Partnership, which it shares with oil giant Suncor (60%) and UTS Energy Corp. (20%).
Teck stalled its final investment decision on the project in late 2008 during the depths of the global financial crisis.
The choice to hold out came shortly after it was reported the oilsands project could cost as much as $24 billion to develop.
Since then, Teck has said little about Fort Hills or its two other oilsands prospects, Frontier and Equinox.
But last month the company reaffirmed its relationship with Suncor after it signed a joint venture agreement to develop a massive wind power project near Drumheller, Alberta.
John Thompson, vice-president of technology and development at Teck, said the company has been considering wind power to supplement some of its energy needs for a decade.
“It’s part of our long-term strategy to augment our energy needs in the jurisdictions where we work,” Thompson told Business in Vancouver. “We’re a major consumer, so this is an opportunity to fit that strategy.”
The Wintering Hills project includes 55 turbines that will have a generating capacity of 88 megawatts, or enough to power 35,000 Alberta homes per year.
Teck’s investment comes with a 30% ownership stake.
Suncor will be the operator and owns the remaining 70% of the project, which would be its fifth wind farm.
Although there are numerous B.C. companies developing wind farms in Western Canada, Thompson said Suncor is the ideal company to partner with because it has extensive experience in wind farm development and operation.
And at least one analyst believes Wintering Hills is a good opportunity for Teck to break into the renewable power scene.
“They’re probably going to say this is just a teaser to get us exposed, to get us to understand it … on paper, it makes a good little investment, and perhaps it is a way to curry a little favour with Suncor,” said the analyst, who asked to remain anonymous.
Apart from the oilsands, Teck’s only other operation in Alberta is the Cardinal River coalmine near Hinton.
Thompson said the company has no immediate plans for any other renewable power projects.
Kyle Happy, a Suncor spokesman, agreed that Wintering Hills would be a good starting point for Teck.
“Suncor has the experience in developing these projects,” Happy said, “and it’s an opportunity for Teck to come in and learn and be a part of that.”
When asked what the energy giant’s plans were at Fort Hills, Happy said there was nothing new to report.
Teck also declined to comment on the project, which could contain as much as 3.4 billion barrels of bitumen.
According to a July 27 Teck report, Fort Hills has a $33 million budget this year, of which the Vancouver company’s share would be $9 million. The report also said the timing of a final investment decision remains uncertain.
The unnamed analyst believes the oilsands projects are unlikely to proceed while oil prices remain below $80 a barrel.
“If we do go back to $100 oil … these projects will go forward, I just don’t think they’re in the typical investment horizon of any investor we talk to.”
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Nearly two months of strike action at Teck Resources’ Coal Mountain mine near Sparwood has ended with a five-year agreement, the company announced last week.
“We are pleased that an agreement is in place and congratulate the members of the negotiating committees on reaching a successful resolution,” said Bill Fleming, vice-president operations and engineering at Teck.
In August, BIV reported the strike at Coal Mountain and a dryer explosion at the company’s Greenhills mine might have an effect on coal production. (See “Teck fighting operational and labour fires in southeast B.C.” – issue 1086; August 17-23.) The union agreement means Coal Mountain has resumed production, and the company does not expect the strike to significantly affect coal production.
On September 20, Teck updated its coal sales guidance and said neither incident had a “material impact” on sales.