November 2, 2018
Canada’s second-largest energy producer doesn’t need to reduce crude output as some of its peers are doing to cope with low prices, says Suncor Energy’s CEO Steve Williams.
Suncor, which has dedicated pipeline space for its crude as well as refineries in Canada, is mostly insulated from the impact of growing price discounts that U.S. refineries apply to Canadian oil, which have hurt rival producers, Williams told Reuters.
Those discounts are largely attributed to pipeline constraints.
“The higher-cost producers are having to pull back because they’re not making any margin on their last barrel. We’re not in that circumstance,” Williams said on a call with analysts in response to a question on whether Suncor would cut production. “If we were, we wouldn’t hesitate to pull throughput back.”
Rival Cenovus Energy Inc said on Wednesday it was limiting output due to severe discounts.
Discounts should abate this year, with more significant relief arriving when Enbridge Inc’s expanded Line 3 pipeline comes online late next year, Williams said.
Canadian heavy crude for December delivery in Hardisty, Alta., was at $46.50 a barrel below North American crude futures on Thursday, according to Shorcan Energy brokers. That meant Canadian crude was trading at less than half the benchmark price.
Late on Wednesday, Suncor reported improved third-quarter profit on higher oil prices and increased refinery margins, along with increased sales and output.
Some analysts have suggested Suncor could be interested in buying heavy-crude producer MEG Energy Inc, which has received a hostile bid from Husky Energy Inc. But Williams said Suncor was not currently considering any specific acquisition.
“Particularly in the Canadian sector, there’s nothing specific we’re looking at because we don’t see that value-added” opportunity, he told Reuters, adding that Suncor will likely boost its dividend in early 2019.
Williams said Suncor, majority owner of the problem-plagued Syncrude oil sands site, had agreed with its partners on terms to connect Syncrude by pipeline with Suncor’s base plant, in an effort to improve reliability.
Syncrude, in which Imperial Oil Ltd, Sinopec and a subsidiary of CNOOC Ltd own smaller stakes, was forced to shut down in June due to a power outage but is now back online.