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Rick George, Suncor's president and chief executive officerReuters

There's a bun fight in the oil sands.

Suncor Energy Inc., facing rising costs and uneasy investors, said its oil sands expansion will financially outshine a closely followed project by rival Imperial Oil Ltd.

Outgoing Suncor chief executive officer Rick George, in his next-to-last conference call ( which can be listed to here), said his company's undeveloped Fort Hills oil sands mine will have "significantly" lower costs than Imperial's Kearl mine, which is on the verge of producing bitumen.

"Some of the numbers that you're seeing, for example, on Imperial's Kearl project, look extremely high to us," Mr. George said on Suncor's fourth-quarter conference call. "Those look really way out of range."

Imperial countered, saying it has a "superior" project. "Kearl is one of the best undeveloped deposits of mineable oil sands in the region," Imperial spokesman Pius Rolheiser said.

Suncor's unusually public comparison highlights how far energy executives are now willing to go to quell investors' fear about cost pressures in northern Alberta. Mr. George warned investors not to use Kearl's costs when calculating Fort Hills' prospects. While costs are rising all across North America's energy hotspots, oil sands mines are especially concerning because the development phases are far larger than drilling expansions and require much more capital.

Suncor has not released detailed forecasts for Fort Hills yet, but Mr. George said internal estimates are "significantly below" those Imperial released. "The numbers they've announced on a cost-per-barrel just … look higher than what we're seeing on Fort Hills," he said.

Imperial thinks the initial investment to develop Kearl will be about $6.20 a barrel for the 4.6-billion-barrel resource. The estimate, released in December, was a 24-per-cent increase over its previous calculation of $5 a barrel. Imperial, controlled by Exxon Mobil Corp., plans to spend about $30-billion developing Kearl, a 25-per-cent jump over its previous calculation.

As a result, it could cost about $80,000 per flowing barrel, an industry measure, according to a research note Kam Sandhar, an analyst at Peters & Co. Ltd., published in December. By comparison, Mr. George said a "pretty good range" for Fort Hills' estimated cost per flowing barrel would be between $55,000 and $70,000. At the same time, he declined to go into detail and said the company would give a more precise estimate in early 2013.

Fort Hills contains more than four billion barrels of bitumen resource, Suncor estimates. It controls 40.8 per cent of the project. France's Total SA and Teck Resources Ltd. own the rest.

Fort Hills and Kearl are not directly comparable, and different companies calculate costs using different yardsticks. Kearl is the first mine to be built without an upgrader, and Suncor already has chunks of infrastructure in place at its existing sites. However, Kearl – expected to produce oil this year, while Suncor and its partners are a year away from deciding whether to build Fort Hills – is the only mine to be built since Canadian Natural Resources Ltd.'s Horizon project and some, therefore, use it for cost insights.

"We continue to believe that we're developing and will develop for our shareholders a superior project," Imperial's Mr. Rolheiser said. "The ore grade, quantity of bitumen that can be produced, will provide our project with a cost advantage and an efficiency that will be very attractive."

Suncor earned $1.427-billion or 91 cents a share in the fourth quarter, compared with $1.286-billion or 82 cents in the same quarter of 2010.