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Suncor sells $395m worth stake in East Tank Farm

Canada-based Suncor Energy has divested a stake of 49% in its East Tank Farm Development, an oilsands storage terminal in Alberta province to Fort McKay First Nation (FMFN) and Mikisew Cree First Nation (MCFN) for a sum of C$503m ($395.3m).

Located about 30km north of Fort McMurray, the East Tank Farm Development is a bitumen and diluent storage, blending and cooling facility.

The midstream asset is mainly dedicated to service bitumen produced from the Fort Hills oil sands mining project which is co-owned by Suncor, Total E&P Canada and Teck Resources.

As part of an agreement made in September 2016, FMFN agreed to buy a stake of 34.3% in the East Tank Farm Development for nearly C$350m ($275m).

FMFN chief Jim Boucher said: “The deal represents the largest business investment to date by a First Nation entity in Canada, and not only demonstrates the great potential for partnerships between First Nations and industry but serves as a model for how First Nations can achieve greater self-determination through financial independence.”

In October 2016, Suncor agreed to sell a stake of 14.7% in the project to MCFN for nearly C$147m ($115.5m).

Suncor upstream president Mark Little said:” This unique partnership has been part of a journey that demonstrates how innovative thinking and collaborative spirit can result in a mutually-beneficial opportunity and it has changed the way Suncor thinks about how our Aboriginal neighbours may participate in energy development.”

The East Tank Farm Development is financed mainly from revenue generated from long-term terminal services agreements with the Fort Hills oil sands partners.

Fluor was the engineering, procurement, fabrication and construction (EPFC) contractor of the project which was commissioned in the second quarter of this year. On the other hand, the Fort Hills project, which will be supported by East Tank Farm’s storage, is expected to produce its first oil by the year end.