Rick George, Suncor Energy Inc. ’s chief executive, believes the two proposed pipelines which would carry Canadian crude to the Texas Gulf Coast are needed, but that the Keystone XL project should take priority.
Enbridge Inc. last week unfurled plans to build a pipeline from Cushing, Oklahoma, to refineries in Texas. This joint venture project will compete with TransCanada’s more ambitious Keystone XL effort to connect the oil sands directly to the Gulf Coast.
Canadian crude production is set to expand rapidly in the coming years, but this could be stymied unless new pipelines are built.
“At the end of the day, they are needed and they both may be very viable projects,” Mr. George told reporters late Wednesday evening. “The first thing we need is to get Keystone approved.”
Asked whether Suncor will sign shipping contracts on Enbridge’s proposed Wrangler line, he said: “No current plans.” The market, Mr. George said, will be the final arbiter of Wrangler’s future.
“Any infrastructure we put in that de-bottlenecks and actually draws down this [price]differential between Brent and [West Texas Intermediate oil prices]is good both for the consumer and our industry.”
Keystone needs approval from the U.S. Department of State because it crosses the border between Canada and the United States. Wrangler, which is expected to cost between $1.5-billion and $2-billion, does not face that same challenge.
The carbon intensity of emissions from the oil sands is a key argument critics use when lobbying against Keystone XL. Mr. George, who said he is “mad keen about technology in (the oil sands) industry,” believes emissions from oil sands could mirror those from conventional sources of oil in 10 to 15 years thanks to new technology.
The oil sands are now dominated by large energy companies, many with roots overseas. The size of these players will keep merger and acquisition activity suppressed, he said.
“I don’t expect any kind of wholesale M+A work,” he said. “I don’t see those (big players) consolidating. Some of the smaller players, maybe.”