Suncor Energy provides operational and 2020 guidance update
Press Release
All financial figures are in Canadian dollars.
CALGARY, Alberta, Sept. 07, 2020 — Following the August 14 incident at its Base Plant operations, in light of identified performance improvement opportunities at its Firebag operation, and bringing on the second train of production at Fort Hills, Suncor is today providing an operational update and revised 2020 guidance.
On August 16, 2020, Suncor reported it had experienced a fire at the secondary extraction facilities of its Base Plant mine. On August 29th, production was restored to 165,000 barrels per day (bbls/d) of mined bitumen. Although initial repairs can allow the mine to operate at full rates, production has been restricted to manage bitumen quality into the upgraders. Production is expected to continue to ramp up and will achieve full mining rates of approximately 300,000 bbls/d by the middle of the fourth quarter, as bitumen treatment facilities return to full operation. During this period of reduced production, selected maintenance activities, originally scheduled for later in the year, have been accelerated and are reflected in the updated production guidance. Repair costs are included within the corporate capital guidance; the majority of the repair costs are expected to be reimbursed through insurance proceeds to be received in 2021. Full year Oil Sands Operations cash operating costs guidance(1) has been revised to $28.00 – $31.00 per barrel.
Starting in late September, Firebag in-situ production rates will be reduced to 110,000 bbls/d for approximately four weeks as Suncor accelerates maintenance originally scheduled for 2022, and to enable us to expand the capacity of the facility by fully integrating the new, incremental emulsion handling and steam infrastructure. Following completion of this work, Firebag nameplate capacity is anticipated to increase by 12,000 bbls/d to 215,000 bbls/d, and is expected to be producing at normal capacity utilization (~95%) by early November. The capital expenditure required for this work is included within capital guidance.
Suncor is working with the Fort Hills partners to restart the second primary extraction train in September, with initial gross production of approximately 120,000 to 130,000 bbls/d. This lays the foundation for improved cost effectiveness through optimization of the mine fleet, without the use of additional contractors, and includes the completion of the full deployment of autonomous haul trucks by the end of 2020. At this initial production level, Suncor expects to retain all of the previously announced sustaining capital savings and approximately 90% of the estimated operating costs savings. 2020 production guidance has been updated to 60,000 – 65,000 bbls/d, with a reduction to the Fort Hills cash operating costs(1) per barrel range by $2 per barrel, to $32.00 – $35.00. Once the second train is operating, the owners will evaluate further increases in production.
Syncrude 2020 planned maintenance program is complete, and the asset is being returned to normal operations. The interconnecting pipelines are on track for commissioning in Q4. The Syncrude cash operating costs(1) per barrel range has been reduced to $34.00 – $37.00, based on year to date performance, lower operating costs and our expectations for the balance of the year.
“Despite the operational incident and all the challenges of 2020 – unprecedented drop in oil prices, global pandemic and economic slowdown – Suncor has continued to focus on safety and maximizing value through enhanced performance and lowering costs,” said Suncor president and chief executive officer Mark Little. “We’re pleased to be making progress on lowering costs at Fort Hills and Syncrude; we’ve opportunistically advanced maintenance at Base Plant and Firebag, brought on additional capacity at Firebag, and we believe this disciplined and strategic approach lays the foundation for strong performance in 2021.”
Due to the reduction in 2020 capital expenditures and the current deferral of the Terra Nova Asset Life Extension project, E&P production guidance has been updated to reflect lower production rates.
Strengthening momentum in the Downstream business performance continues, and is in line with the throughput guidance for refinery utilization and refined product sales.
Following these operational updates, production estimates for the third quarter are anticipated to be 305,000 – 320,000 bbls/d for Oil Sands Operations; this is comprised of 250,000 – 265,000 bbls/d of synthetic crude oil and approximately 55,000 bbls/d of bitumen. Full year corporate production guidance has been revised to 680,000 – 710,000 bbls/d.
(1) Non-GAAP financial measures. See the Non-GAAP Financial Measures section of this News release.
| Capital Expenditures (C$ millions) (1) | |||
| 2020 Updated Full Year Outlook September 7, 2020 |
% Economic Investment (2) |
||
| Upstream Oil Sands | 2,600 – 2,800 | 25% | |
| Upstream E&P | 450 – 500 | 95% | |
| Total Upstream | 3,050 – 3,300 | 40% | |
| Downstream | 450 – 550 | 20% | |
| Corporate | 100 – 150 | 80% | |
| Total | 3,600 – 4,000 | 40% | |
| 1. Capital expenditures exclude capitalized interest of approximately $120 million. 2. The balance of capital expenditures represents Asset Sustainment and Maintenance capital expenditures. For definitions of Economic Investment and Asset Sustainment and Maintenance capital expenditures, see the Capital Investment Update section of Suncor’s Management’s Discussion and Analysis dated July 22, 2020 (the MD&A). |
|||
| Production & Refinery Utilization (as of September 7, 2020) | ||
| 2020 Updated Full Year Outlook |
||
| Suncor Total Production (boe/d) (3) | 680,000 – 710,000 (4) | |
| Oil Sands Operations (bbls/d) | 355,000 – 380,000 (5) | |
| Synthetic Crude Oil (bbls/d) | 295,000 – 310,000 | |
| Bitumen (bbls/d) | 60,000 – 70,000 | |
| Fort Hills (bbls/d) Suncor working interest of 54.11% | 60,000 – 65,000 | |
| Syncrude (bbls/d) Suncor working interest of 58.74% | 160,000 – 175,000 | |
| Exploration & Production (boe/d) | 100,000 – 110,000 (4) | |
| Suncor Refinery Throughput (bbls/d) | 390,000 – 420,000 | |
| Suncor Refinery Utilization | 84% – 91% (6) | |
| Refined Product Sales (bbls/d) | 500,000 – 530,000 | |
3. Barrels of oil equivalent per day (boe/d)
4. At the time of publication, production in Libya continues to be affected by political unrest and therefore no forward-looking production for Libya is factored into the Exploration and Production and Suncor Total Production guidance. Production ranges for Oil Sands operations, Fort Hills, Syncrude and Exploration and Production are not intended to add to equal Suncor total production.
5. Oil Sands operations production includes synthetic crude oil, diesel, and bitumen and excludes Fort Hills PFT bitumen and Syncrude synthetic crude oil production. These ranges reflect the integrated upgrading and bitumen production performance risk.
6. Refinery utilization is based on the following crude processing capacities: Montreal – 137,000 bbls/d; Sarnia – 85,000 bbls/d; Edmonton – 142,000 bbls/d; and Commerce City – 98,000 bbls/d.
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