Syncrude's annual production in 2007 totalled 111.3 million barrels, or approximately 305,000 bpd, exceeding the prior year by 17 million barrels and establishing an annual production record. Based on our 36.74 percent working interest, production net to the Trust totalled 40.9 million barrels in 2007 compared with 33.5 million barrels in 2006 based on a 35.49 percent interest.
The increase in year-over-year volumes primarily reflects a full year of Stage 3 volumes along with a higher Syncrude working interest in 2007. The incremental Stage 3 production was, however, partially offset by constrained production rates and downtime of Coker 8-3. This unit produced at or near its design rate at various times during 2007 but underwent maintenance in the second and fourth quarters.
While Syncrude had not anticipated such extensive maintenance on Coker 8-3 that early in its run length, various performance issues often occur when bringing a new, complex expansion such as Stage 3 into operation. The coker was also brought down for a week in December 2007 following a fire in the environmental section of the unit. Production in 2007 was reduced by unplanned maintenance on Coker 8-2 during the first quarter as well as planned maintenance on other units, including a turnaround of the LC-Finer. In comparison, aside from a brief initial startup in May 2006, Stage 3 production commenced at the end of August 2006, thereby contributing volumes for only the last four months of 2006. Production in 2006 was reduced by a more extensive maintenance schedule with turnarounds of several units, including an extended turnaround of Coker 8-1.
Operating costs during 2007 averaged $25.23 per barrel, down $1.84 per barrel from 2006, largely as a result of higher volumes, less turnaround and maintenance activity and lower purchased energy costs in 2007 relative to 2006. Operating costs are discussed more fully in the "Operating costs" section of this MD&A.
Canadian Oil Sands markets its own share of Syncrude production, which is transported by various pipelines to refineries throughout most of Canada and the U.S. During the third quarter of 2007, Syncrude transitioned its production volumes from its historical Syncrude™ Sweet Blend ("SSB") quality level to a higher quality Syncrude™ Sweet Premium ("SSP") blend. We had anticipated that SSP's improved distillate cetane and smoke point levels relative to SSB would enable some of our existing refinery customers to increase the amount of Syncrude production they process, thereby containing transportation costs as our production would not have to move as far to clear the market. Early indications seem to support our previous expectations based on modest increases in certain refinery customers' demand for our product in the fourth quarter of 2007. Since Syncrude does not produce both products concurrently, it is not possible to determine what price premium, if any, the new SSP volumes attract over its SSB product. We have begun using the term "Syncrude crude oil", or "SCO", in lieu of the terms SSB and SSP, to refer to Syncrude's production of synthetic crude oil and our sales volumes thereof in the current and prior year.
Following a comprehensive onsite assessment of the Syncrude operations in the first quarter of 2007, the Syncrude Joint Venture owners approved the recommendations of an Opportunity Assessment Team as part of the Management Services Agreement ("MSA"). Imperial Oil Resources Ltd. ("Imperial Oil") began implementation of the recommendations in 2007 and continues to work with Syncrude Canada on establishing sustained annual production of 129 million barrels, or 47 million barrels net to the Trust. The MSA is an agreement between Syncrude Canada and Imperial Oil signed in late 2006 that has an initial term of 10 years. The goal of the MSA is to improve Syncrude's operating reliability and energy intensity, as well as identify capital and operating cost efficiencies through the utilization of Imperial Oil and ExxonMobil's global expertise in the areas of operational, technical and business management services. The MSA also provides Syncrude Canada with access to additional labour resources from Imperial and ExxonMobil to somewhat mitigate the shortage in the Fort McMurray area.
