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Suncor to spend $850M less than expected this year

Firebag 4 came in under budget and the pace of Total developments.


November 1, 2012
by CANADIAN PRESS

Suncor Energy expects to spend $6.65 billion this year.

CALGARY — Suncor Energy Inc. says its capital spending in 2012 will be $850 million lower than previously planned.

Canada’s largest energy company says now expects to spend $6.65 billion this year, down from $7.5 billion as it earlier predicted.

Suncor owes the lower spending to its new Firebag Stage 4 oilsands project, which came in 10% under budget, as well as slowing the pace of developments it jointly owns with French energy giant Total SA.

“At the start of the year, we said that cost and quality metrics would be Suncor’s priorities when executing growth projects,” said CEO Steve Williams in a release.
“We’re delivering on these goals by spending capital efficiently and maintaining a disciplined approach to pre-sanction spending on our operated growth projects.”

Suncor isn’t the only oilpatch name to signal a more frugal approach these days. Talisman Energy Inc.’s new CEO, Hal Kvisle, said on a conference call earlier this week that 2013 spending will be about 25% lower than this year, with much less of a focus on risky international exploration.

Suncor is the largest operator in the oilsands, with huge mining operations north of Fort McMurray, a 12 per cent interest in the Syncrude Canada Ltd. mine, a 41% stake in the yet-to-be-developed Fort Hills mine and steam-driven operations at Firebag and Mackay River.

In December 2010, Suncor inked a $1.75-billion deal with Total to work together in the oilsands.

In July, Williams said Suncor and Total are reviewing their plans for the Fort Hills and Joslyn mines and the Voyageur upgrader in an effort to drive down costs.
That means that the partners’ expansion plans may take longer than previously thought – a sacrifice Suncor is willing to make if it means avoiding major cost overruns the sector experienced before the recession.

The three projects involved in that joint venture are being weighed on their individual merits, and could theoretically be scrapped if they’re not found to be economically viable.

A decision had been expected to come toward the middle of next year, but the process is now expected to take longer.

© 2012 The Canadian Press