Suncor might slow oilsands expansion approvals
Three joint venture projects up for review based on shareholder value.
CALGARY: Suncor Energy Inc. says it’s willing to push back the schedules of some of its oil sands expansion projects if it means it can ensure it’s spending its money in the best way possible.
Canada’s largest energy company, alongside joint-venture partner Total E&P Canada, is reviewing plans for the Fort Hills and Joslyn mines as well as the Voyageur oil sands upgrader.
It hopes to be able to make a decision on whether to go ahead with those projects around the middle of next year, but says it could take longer than previously planned.
“I’m not worried about that review date potentially slipping, as long as we’re seeing cost improvements and quality improvements, which lead then to better returns for shareholders,” said CEO Steve Williams.
Suncor inked the $1.75-billion deal with Total – a division of the French energy giant – in December 2010.
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.
Williams said the review Suncor is undertaking wasn’t spurred by any specific concerns over cost inflation or volatile commodity prices.
“We’re looking at how we get the best economics for those projects,” he said.
Williams became CEO of Suncor in May, when Rick George retired after more than two decades at the helm. Williams had been Suncor’s chief operating officer prior to his promotion to the top job.
He said he’s often asked whether Suncor will change direction under his leadership.
“Given the fact I joined Suncor over 10 years ago and I was one of the architects of our strategy, you shouldn’t expect to see Suncor to take a sudden left-hand turn. Our strategy is well established and we’ll be working hard to execute it effectively,” he said.
There will, however, be some changes in priorities. Suncor won’t be obsessed with hitting daily production of one million barrels by 2020, for example.
“Growth for the sake of growth doesn’t interest me too much. What interests me is profitable growth,” said Williams.
Suncor will also have a “rigorous scrutiny on capital discipline” to ensure it’s spending within its means.
Williams said he doesn’t see big capital programs as necessarily the best way to spur growth.
“I believe we can achieve significant growth simply by running our assets better,” he said.
Suncor recorded lower profits during the second quarter and booked $694 million in charges related to a natural gas asset in war-torn Syria.
Net earnings amounted to $333 million, or 21 cents per share, compared to $562 million, or 36 cents per share, a year earlier.
Revenues were $9.7 billion, up from $9.3 billion.
© 2012 The Canadian Press