Suncor CEO expects Canada will ensure oil pipeline expansion goes ahead

Reuters have reported that the Chief Executive of Canada&rsquo;s Suncor Energy Inc., Steve Williams, said this week that he fully expected Prime Minister Justin Trudeau to move in the &ldquo;next few weeks&rdquo; to ensure that Kinder Morgan Canada&rsquo;s Trans Mountain oil pipeline expansion goes ahead. Kinder Morgan halted work last month on the Trans Mountain expansion, citing opposition in British Columbia, and said the company would decide by 31 May whether to go ahead with the project. Williams would not say what exactly he expected Trudeau to do to guarantee the CAN$7.4 billion (US$5.8 billion) project gets built, but told reporters he was encouraged by a long conversation he had recently with the PM. &ldquo;I&rsquo;m encouraged by the comments they&rsquo;ve made, but the proviso I put on it is that we&rsquo;ve got to see these plans roll out that they&rsquo;ve been working on and I think we see that over the next few weeks,&rdquo; Williams said. Canadian energy producers are struggling as increased oilsands output has run up against a lack of new export pipelines and tight rail capacity, sending the differential between Canadian oil prices and the US crude benchmark CLc1 to multi-year highs. Williams also stated that Suncor&rsquo;s current growth plan was not constrained by pipeline bottlenecks, however, the Calgary-based company did not expect to make any further major investments in the oilsands until market access improves. This is different to numerous other oilsands producers, including Cenovus Energy Inc., who curbed their oilsands production in 1Q18 amid pipeline bottlenecks and the resulting big discounts for Canadian heavy oil barrels. Suncor &ndash; Canada&rsquo;s largest integrated oil company &ndash; also announced that its Fort Hills oilsands mine is now producing at a rate of 150 000 bpd and the project&rsquo;s third and final extraction train will be online this month, allowing Suncor to reach full 190 000 bpd capacity earlier than expected. Williams said the company is on pace to ramp up production another 10% next year and that &ldquo;We have existing pipeline access to accommodate all of our oilsands production,&rdquo; including the new barrels from Fort Hills. Although Suncor is able to maintain, and even grow production, financial costs remain a burden as the difference grows between the price per barrel of oilsands compared to crude &ndash; a difference that is blamed on the difficulty in getting heavy crude out of Western Canada because of a lack of pipeline space. Suncor reported that the discount paid for oilsands blend Western Canadian Select compared with New York-traded West Texas Intermediate crude widened to an average of US$24/bbl in the first quarter, double the US$12/bbl average in the fourth quarter of 2017. Williams said he hopes that "good sense and reason prevail" but added Suncor has a contingency plan in case Alberta follows through with its plan to restrict oil or refined fuel exports through the existing Trans Mountain pipeline to B.C.

Suncor CEO expects Canada will ensure oil pipeline expansion goes ahead

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