CALGARY — It will be more than five years before Suncor Energy Inc. makes any significant investments to secure new bitumen supply, the Calgary-based oil company said Tuesday.
At a presentation for investors, executives said they believe the company has a number of options when it comes to securing additional sources of bitumen to replace output from its Base Plant oilsands mine, and will take its time to evaluate them.
"To be crystal clear, there is no significant Base Mine bitumen replacement investment in the next five years," said Suncor's chief financial officer Kris Smith.
"Some early development spending will be starting in this time frame, but a significant spend will not be until towards the back end of the decade."
The Calgary-based company has spent a number of years exploring options to sustain the supply of thick, sticky oilsands crude to its Base Plant upgrading facilities north of Fort McMurray, Alta.
Suncor's Base Plant has a production capacity of 350,000 barrels per day, according to the company's website, but its Base Plant mine is expected to be largely depleted by the mid-2030s.
To solve its supply problem, Suncor has proposed a new, 225,000 barrel-per-day, open-pit oilsands mine expansion, which would be located adjacent to its existing Base Plant operations.
The company has said the project would take four to five years to construct, and could start production in the early to mid-2030s.
However, it remains highly uncertain whether such a project would receive the go-ahead from regulators.
In 2022, federal Environment Minister Steven Guilbeault told Suncor in a letter that the proposed Base Mine expansion — and its estimated carbon dioxide emission production of three million tonnes annually over the life of the project — would "likely cause unacceptable environmental effects within federal jurisdiction."
Guilbeault also reminded Suncor that the federal government is committed to implementing a formal cap on CO2 emissions from the country's oil and gas sector.
Motivated in part by the chance its Base Mine project will not be approved, Suncor last year signed a $6.1-billion deal to purchase French company Total Energies’ stake in the Fort Hills oilsands project about 90 kilometres north of Fort McMurray.
The move added 135,000 barrels per day of net bitumen production capacity to Suncor’s oilsands portfolio, the company said at the time of the deal.
In March of this year, Suncor also struck a memorandum of understanding with the Fort McKay First Nation in northern Alberta to explore the possibility of mining for bitumen on reserve lands — a Canadian first. That initiative is still in the early stages of technical and commercial feasibility assessments.
Suncor CEO Rich Kruger told analysts on Tuesday's investor presentation that he doesn't believe there is just one solution to Suncor's supply issue.
"The output answer, we think is going to be a series of things, timed accordingly," he said.
"We believe we will have a number of options."
The company said the fact its Fort Hills site is connected by pipeline to the Base Plant offsets some of the short-term supply pressure. It said in the interim, it will work to optimize that pipeline to obtain maximum efficiency.
Suncor, which is a member of the Pathways Alliance group of oilsands companies that has pledged to achieve net-zero greenhouse gas emissions from production by 2050, said Tuesday it remains committed to that goal.
Members of the Pathways Alliance have proposed jointly spending $16.5 billion on a proposed carbon capture and storage network for northern Alberta, which would trap harmful emissions from oilsands facilities and transport them via pipeline to be stored in an underground hub near Cold Lake.
But Smith said Tuesday the Pathways group needs more certainty from provincial and federal governments around incentives for carbon capture and storage before it can move forward with "material capital commitments" on that front.
This report by The Canadian Press was first published May 21, 2024.
Companies in this story: (TSX:SU)
Amanda Stephenson, The Canadian Press
