SILVERBIRCH ENERGY CORPORATION PROVIDES UPDATE ON COST ESTIMATE FOR THE FRONTIER AND EQUINOX PROJECT
June 29 2011 - 8:15PM
PR Newswire (Canada)
CALGARY, June 29, 2011 /CNW/ -- /NOT FOR DISTRIBUTION TO U.S.
NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/ CALGARY,
June 29, 2011 /CNW/ - SilverBirch Energy Corporation (TSXV: 'SBE')
("SilverBirch" or the "Corporation") is providing an update on the
Frontier and Equinox oil sands mining project (the "Frontier and
Equinox Project") including the results of the Design Basis
Memorandum (DBM) study and information regarding the preliminary
capital cost estimates. The Frontier and Equinox Project is located
approximately 110 km north of Fort McMurray and is jointly owned by
SilverBirch and Teck Resources Limited ("Teck"). Each company
holds a 50% interest and Teck is the operator. The owners are
jointly proceeding with engineering and permitting activities to
advance the project towards production. The current capital cost
estimate for Phases 1 and 2 of the Frontier Project is $14.5
billion on a Q4 2010 basis. Phases 1 and 2 are expected to have a
nameplate production capacity of 159,000 barrels per calendar day
of bitumen. These preliminary cost estimates were prepared by major
engineering companies currently active in the oil sands industry,
and have an expected accuracy of -10% to +30%. These
estimates will be subject to revision as further engineering work
is undertaken on the project. Phases 3 and 4 are expected to bring
the total production capacity of the Frontier and Equinox Project
to 277,000 barrels per calendar day of bitumen and will bring the
total project cost to $22.9 billion. Direct operating costs for
bitumen production are estimated to be approximately $24 per barrel
over the life of the Frontier and Equinox Project, and on average a
further $2.60 per barrel will be required for sustaining capital.
"SilverBirch considers the estimated cost of approximately $83,000
per flowing barrel for the entire Frontier and Equinox Project to
be well within the expected range of costs for oil sands mining
projects and consistent with other operators' experience," said
Howard Lutley, President and Chief Executive Officer of
SilverBirch, "It incorporates recent pricing on materials,
equipment and labour and reflects a realistic design basis."
The Corporation also notes that the design of the mine and tailings
facilities complies with all of the latest requirements for
tailings and water management as well as applying best commercially
available emissions management technologies. The owners are
currently advancing the preparation of the Environmental Impact
Assessment and regulatory application for the Frontier and Equinox
Project. SilverBirch expects the regulatory application will
be submitted to the Alberta Government in the fourth quarter of
2011, thus initiating the formal regulatory process.
Corporate sanction of the Frontier and Equinox Project could occur
as early as 2014/2015 with construction commencing in 2016 and
commercial oil production obtained in 2020/2021. SilverBirch is
under no obligation to provide major project funding at this time
and will not be proceeding with construction until a suitable
partnership agreement and funding solutions are in place. The
Corporation continues to review alternatives to fund its share of
the future project costs; this may include strategic or financial
partnering, a reduction of its interest in the project, or sale of
the project. About SilverBirch SilverBirch Energy Corporation is a
pre-production oil sands Corporation headquartered in Calgary,
Alberta, Canada. SilverBirch has a portfolio of mining and in
situ oil sands properties, including 50% ownership of the Frontier
and Equinox Project with Teck Resources Limited, the
Operator. To learn more, please visit
www.silverbirchenergy.com. ADVISORIES TO READER Advisory Regarding
Contingent Resources Estimates This news release contains
disclosure respecting SilverBirch's estimated contingent bitumen
resources. Such disclosure is derived from a report of Sproule
Unconventional Limited dated February 4, 2011 and effective
December 31, 2010. "Contingent resources" are those
quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations using established
technology or technology under development, but which are not
currently considered to be commercially recoverable due to one or
more contingencies. Contingencies may include factors such as
economic, legal, environmental, political and regulatory matters or
a lack of markets. It is also appropriate to classify as contingent
resources the estimated discovered recoverable quantities
associated with a project in the early evaluation stage.
There is no certainty that it will be commercially viable to
produce any portion of the resources. A thorough discussion of the
contingent resources attributed to the assets of SilverBirch is
contained in SilverBirch's annual information form dated April 15,
2011 for the year ended December 31, 2011 (the "AIF") which may be
accessed through the SEDAR website at www.sedar.com. Readers
are urged to consult the AIF for further information. Advisory
Regarding Forward-Looking Information This news release contains
forward-looking information and forward-looking statements within
the meaning of applicable Canadian securities laws (collectively,
"forward-looking information"). The words "expect", "estimate",
"anticipate", "plan" and similar expressions, as well as future or
conditional verbs such as "will" and "may" often identify
forward-looking information. Forward-looking information is
only a prediction. Undue reliance should not be placed on
forward-looking information, as there can be no assurance that the
plans, intentions or expectations upon which it is based will
occur. Specific forward-looking information contained in this news
release includes, without limitation, statements regarding: the
timing and development of the Frontier and Equinox Project; the
estimated operating, capital and total project costs associated
with development of the Frontier and Equinox Project; SilverBirch's
plans regarding the management of tailings; the expected timing of
commencement of operations and the level of production and
production capacity anticipated; expectations respecting external
infrastructure; the continuance of the stakeholder consultation
process; production methods; the timing of filing regulatory
applications; resource estimates relating to the Frontier and
Equinox Project; and the timing of receipt of required approvals
and permits from regulatory authorities. The forward-looking
information set out in this news release, is based on certain
expectations and assumptions regarding, without limitation: future
crude oil, bitumen, natural gas and SCO prices; geological and
engineering estimates; the geography of the areas in which
SilverBirch will be working; and the sufficiency of budgeted
capital expenditures in carrying out planned activities. These
expectations and assumptions are based on certain factors and
events that are not within the control of SilverBirch and there is
no assurance they will prove to be correct. Forward-looking
information is subject to known and unknown risks and uncertainties
and other factors which may cause actual results, levels of
activity and achievements to differ materially from those expressed
or implied in such forward-looking information or statements.
Such risks, uncertainties and factors include, among others: the
early stage of development of SilverBirch's assets and the nature
of the exploration and development activities on such assets; risks
associated with contingent bitumen resources and mine pit
estimates; difficulties encountered during the exploration for,
delineation, development and production of bitumen; costs
associated with exploration for, delineation, development and
production and upgrading bitumen; the need to obtain required
approvals and permits from regulatory authorities; compliance with
and liabilities under environmental laws and regulations; the
volatility of crude oil and natural gas prices and of the
differential between heavy and light crude oil prices; in the
foreign exchange rate amount between the Canadian dollar, the U.S.
dollar and the euro; general economic conditions; changes in or the
introduction of new government regulations; the uncertain ability
of SilverBirch to attract capital for both debt and equity when
necessary. Additional information and other factors that could
affect SilverBirch are included in the documents on file with
applicable securities regulatory authorities, including
SilverBirch's AIF, and may be accessed through the SEDAR website at
www.sedar.com. The forward-looking information contained in this
news release is made as of the date hereof and SilverBirch does not
undertake any obligation to update publicly or to revise any of the
included forward-looking information to reflect new events or
circumstances, except as required by applicable Canadian securities
laws. The forward-looking information contained herein is expressly
qualified by this cautionary statement. NEITHER THE TSX
VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM
IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. To
view this news release in HTML formatting, please use the following
URL:
http://www.newswire.ca/en/releases/archive/June2011/29/c2494.html p
Howard J. Lutley, President and Chief Executive Officer, at
403-538-7030 /p
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