Suncor Lowers Annual Production Guidance 6.2 Percent on Wildfireby
Upstream output now estimated at about 602,500 barrels a day
Added costs seen more than offset by savings from outages
Suncor Energy Inc., Canada’s largest energy company, lowered its crude output forecast for the year by about 6.2 percent because of facility outages caused by wildfires raging across northern Alberta.
Suncor, the producer most affected by the fires, reduced its production target to between 585,000 and 620,000 barrels a day in a statement on Monday. That compares with a forecast released in April of between 620,000 and 665,000 barrels a day.
Suncor is ramping up its facilities shut down by the fire and expects they will be producing at normal rates by the end of June, the company said in the statement. The company’s base plant mine is expected to return to pre-fire production rates within a week, while the drilling operations are expected to return to normal levels in the third week of June, the same time planned maintenance of the U2 upgrader is scheduled to be complete.
“As a result of working with government and the region, we safely returned thousands of people and restarted our operations in a safe manner,” Steve Williams, chief executive officer of the Calgary-based company, said in the statement.
More than 80,000 people fled an out-of-control wildfire that began May 1, including workers at oil-sands accommodations facilities north of Fort McMurray, the city at the heart of the nation’s industry. Precautionary evacuations of production sites and shutdowns of power lines and pipelines pushed more than 1 million barrels a day of oil-sands supply offline.
Suncor was the producer with most production affected during the fire. As a result, its cash flow for 2016 is expected to fall by 20 percent or C$928 million ($724 million), Greg Pardy, an analyst at RBC Dominion Securities in Toronto, said in a May 26 research note.
Syncrude Canada Ltd., the oil-sands mining joint venture controlled by Suncor, expects to return to production in late June and will ramp up to full output after the completion of a scheduled turnaround by mid-July, Suncor said on Monday. Suncor’s Petro-Canada retail stations have faced shortages of gasoline and diesel due to outages and unplanned downtime at a unit of the company’s Edmonton refinery. That unit is expected to be back in service by the end of the week and Suncor continues to try to minimize supply disruptions, the company said.
Cash operating costs for Suncor are expected to stay within its guidance of C$27 to C$30 a barrel for the year, the company said, while Syncrude’s cash operating costs are expected to rise to between C$41 and C$44 a barrel due to the timing of restart and production ramp-up. The Syncrude cost estimate compares with an April outlook of C$35 to C$38 a barrel.