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A construction site at the new Suncor Fort Hills oil sands mining operations near Fort McMurray, Alberta, September 17, 2014. Suncor Energy Inc. is blaming construction delays and design changes for cost increases as the project nears completion amid uncertain oil markets.Todd Korol / Reuters

Suncor Energy Inc. is blaming construction delays and design changes for cost increases at its Fort Hills oil sands mine as the project nears completion amid uncertain oil markets.

Suncor said the price tag for the sprawling Northern Alberta project now stands between $16.5-billion and $17-billion, up from $15.1-billion previously, after work on the project was halted for about a month during last year's wildfires.

Following more detailed engineering work, the joint venture with France's Total SA and Teck Resources Ltd. is now expected to pump 194,000 barrels of bitumen per day, an increase of 8 per cent from its previous design capacity of 180,000 b/d.

Suncor said it would cover its share of the added cost within its existing budget of between $4.8-billion to $5.2-billion and that it still expected first oil by the end of this year.

But the increase underscores the difficulties of building supersized projects in Alberta's oil sands and comes despite Suncor touting the benefits of a cooling market for labour and materials as rivals slammed the brakes on big-ticket expansions.

U.S. oil prices are hovering at just over half the level Suncor estimated they would be when it decided to build Fort Hills back in 2013, and executives concede it is likely the last development of its kind barring a substantial recovery in oil markets.

"Mining investments are coming to an end, not just for Suncor, but for the industry," chief executive officer Steve Williams told analysts on Thursday.

"When we look at the absolute economics of Fort Hills, those are not projects we will be repeating in the foreseeable future."

Suncor, Canada's dominant oil sands producer, late on Wednesday reported net earnings for the fourth quarter of $531-million or 32 cents per share, compared with a net loss of about $2-billion or $1.38 in the year-ago period.

The company has cut staff and sold assets as it plowed money into construction at Fort Hills, as well as at Hebron, a $14-billion joint venture led by Exxon Mobil Corp. offshore Newfoundland and Labrador.

With those projects nearing completion, Mr. Williams signalled the company would use some of the $3-billion in cash on its books for dividend hikes and share buybacks as it dials back spending on major new projects.

Late on Wednesday, the company boosted its quarterly dividend by 10 per cent to 32 cents, starting in March. The stock rose nearly 4 per cent in Thursday's session on the Toronto Stock Exchange before paring gains to close at $41.47, up 2.4 per cent.

Several analysts shrugged off the cost increase at Fort Hills, citing as bright spots the mine's increased production profile and smoother performance from Suncor's beefed-up stake in the troubled Syncrude Canada project.

Suncor now owns about 54 per cent of the bitumen mining and upgrading project following its $4.2-billion takeover of Canadian Oil Sands Ltd. and subsequent acquisition of Murphy Oil Corp.'s 5-per-cent stake, for $937-million.

In the quarter, Suncor generated $2.4-billion in cash, up from $1.3-billion a year ago – evidence the company has "plenty of room to manoeuvre even in a $50 oil price environment," Barclays PLC analysts led by Paul Cheng said in research note.

Output from its Northern Alberta operations dipped to 433,400 barrels per day from 439,700 a year ago due to unplanned maintenance.

Still, total production jumped to a quarterly record of 738,500 oil-equivalent barrels per day, from 582,900 boe/d in the fourth quarter of 2015, driven by increases at Syncrude.

Suncor's share of Syncrude production leaped to 187,000 barrels a day, versus 30,900 barrels a year ago. Production costs at the mine fell to $32.55 a barrel from $40.15 in the fourth quarter of 2015.

Mr. Williams said the company was examining ways to integrate its own operations more closely with Syncrude, which has a long history of patchy performance under a management agreement led by partner Imperial Oil Ltd.

They include possibly using Suncor production to minimize processing downtime during maintenance shutdowns, as well as digital tags to monitor employee productivity, he said.

Fort Hills will be completed in late 2017. It cost $15.1-billion and will produce 180,000 barrels of bitumen per day when production begins

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