Suncor CEO Steve Willimas said he is confident both the Kinder Morgan Trans Mountain and Enbridge Line 3 pipelines will be built. Suncor photo.
Suncor CEO says high Canadian discount had no impact on earnings
The CEO of Suncor Energy said on Wednesday that the company’s current growth plan will not be impacted by pipeline bottlenecks, but the company does not expect to make any more investments in the Canadian oil sands until market access improves.
Steve Williams, President and Chief Executive, said while speaking on an investor call that the Calgary-based company will continue to look at assets that are available in the market, but is “not chasing anything”.
“The real strength of our growth plan for the next five or six years is our high level of certainty, and it’s not constrained by market access issues,” he said. “We have existing pipeline access to accommodate all of our oil sands production.”
Currently, Canadian energy producers are fighting to get increased oil sands output to market as pipelines are filled to capacity and rail lines have been focussed on shipping agricultural goods. As a result, the discount for Canadian crude versus US West Texas Intermediate has hit multi-year highs.
Suncor said that the while the discount for Canadian crude nearly doubled in the first quarter of this year compared to the same time in 2017, it had no impact on the company’s earnings or cash flow.
According to the second-largest Canadian energy producer, low oil prices were offset by better midstream and downstream returns.
‘The value of our integrated model was front and centre this quarter as strong financial results from our downstream and offshore assets helped to offset the impact of lower Oil Sands production, and our refineries were able to fully capture the lost value associated with unfavourable heavy crude differentials at Oil Sands,’’ said Williams.
Williams added that despite Canadian producers needing new pipeline capacity to help producers get better prices for their product, there are a number of challenges on the horizon facing pipeline companies.
Kinder Morgan shut down all non-essential work on its Trans Mountain expansion project due to opposition from British Columbia, environmentalists, First Nations and local governments. As well, Minnesota recently set up new roadblocks to Enbridge’s plans to replace its aging Line 3 pipeline.
Williams says he has spoken with Prime Minister Justin Trudeau on the importance of finishing construction of the two pipelines and is confident that the projects, as well as other pipelines to ship crude south to the US, will move forward.
“I don’t think in the last five years I’ve had a higher degree of confidence that these lines are going to be built,” he said. “So I’m greatly encouraged.”
Suncor shares were up 0.88 per cent at C$49.27 on Wednesday afternoon.