EDMONTON — A decision is likely on one of Suncor Energy’s next major oilsands projects later this year, president and CEO Rick George said Tuesday.
In an investors’ webcast to discuss his firm’s fourth-quarter earnings, George said Suncor will be in a position to make a decision about the future direction of development this fall. “Right now, we are still doing our homework on this.”
Suncor reported that fourth-quarter earnings rose to $457 million, or 29 cents a share, compared with a net loss of $215 million, or 24 cents a share, for the fourth quarter of 2008, ended Dec. 31.
Revenue rose 9.8 per cent to $7.636 billion from $6.952 billion. Cash flow from earnings came in at $1.129 billion in the quarter, compared with $231 million previously.
Its shares lost 5.71 per cent, or $1.99, to $32.85 by Tuesday’s close on the Toronto Stock Exchange.
Analysts polled by Bloomberg had forecast the company would deliver operating earnings, which exclude one-time charges, of 39 cents a share, compared with the 21 cents that was reported Tuesday.
George said about $60 million in repairs have been made after a December fire at one of Suncor’s two upgraders near Fort McMurray, and the unit is now in its startup phase.
After digesting Petro-Canada in 2009, Suncor is in the midst of raising up to $2 billion by selling natural gas properties in Trinidad, the North Sea and Netherlands. It has already disposed of Colorado assets it gained in the merger.
In future, Suncor aims to grow at a steady rate of up to eight per cent while increasing oil production by 10 to 12 per cent annually.
But there will be no return to past practices of doing too much, too quickly.
New projects will be done in sequence, George said.
“We won’t have too many projects going and become overextended. We have projects that extend out to 2020, and rather than rush at this and create our own firestorm of inflation, we will work at a steady state. It is better for our employees and contractors,” he said.
Suncor is spending $900 million this year to complete its Firebag 3
in-situ project, which should be operating early next year. Engineering is advanced on the adjacent Firebag 4 in situ project, “but we have not announced the exact timing of this.”
After that, Suncor has to choose among three major in situ projects — Firebag 5 and 6, MacKay River and the Lewis project. All will be major bitumen producers, with output of 40,000 to 62,500 barrels per day.
Also in the mix is the former Petro-Canada Fort Hills project, a mine site with production of 165,000 bpd in its first phase. Originally, the project also included an upgrader on a site north of Fort Saskatchewan.
But George wouldn’t speculate on how these projects will be ranked.
“We will be applying our technology … to each of these projects, and see what gives us the highest return on capital,” he said.
He added that when Suncor acquired Petro-Canada it agreed to have Fort Hills in production by 2018-19.
“I don’t see that as being an issue. And none of these (oilsands) leases has expiry dates,” he said.
Suncor is “long” on bitumen,
and expects the differential gap between bitumen and light oil to remain tight for five to 10 years, meaning upgraders won’t be economic for Suncor.
However, there is interest in the half-finished Voyageur upgrader from potential joint-venture firms.
“We’ve talked with a number of players. I think Voyageur will be among the first, if not the first, of the upgrader projects to restart. But I don’t see it restarting in the next 12 months,” he said.
George says Suncor is particularly proud of its Tailings Reduction Operations (TRO) advance, which converts fluid fine tailings more rapidly into a solid landscape suitable for reclamation.
“The vision is that (in five to seven years) we’ll get to a point where we have only one active pond at a time,” he said.
