Joint Venture Operating Costs

Joint venture operating costs were $2,077 million in 2005, up from $1,623 million in 2004. The increase in operating costs was largely due to higher energy costs and higher production costs for maintenance turnarounds and catalyst purchases.

Purchased energy costs, comprising imported natural gas and electric power, were up 49 per cent year over year, driven by record high natural gas prices and higher import volumes of natural gas and power.

Natural gas prices increased 34 per cent to $8.40 per gigajoule in 2005, while Syncrude’s imported natural gas volumes rose by 17 per cent. Increased natural gas imports were required to meet the new demand for the start-up of several Stage 3 expansion facilities, and to offset lower internally generated fuel gas production during the maintenance turnaround of Coker 8-2.

The increased costs for turnarounds and catalyst purchases reflect the extensive turnaround work completed in 2005, higher catalyst utilization, and higher prices for precious metals, which are a key component of catalysts. Turnaround work completed in 2005 included the revamp of several existing upgrading units as part of the Stage 3 expansion project, as well as a number of project related tie-ins.