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President and CEO of Suncor Energy Steve Williams prepares to address shareholders during the company's annual general meeting in Calgary, Alberta, April 30, 2013.TODD KOROL/Reuters

Syncrude Canada Ltd., one of the country's largest oil sands projects, will hold off on expansion ambitions until it smooths out problems that have been weighing on existing operations, according to one of the major partners.

Suncor Energy Inc. chief executive officer Steve Williams said all of Syncrude's partners are "dissatisfied" with the project. Mr. Williams, speaking at Suncor's first-ever investor day, noted the disappointment has stretched for years.

Syncrude is one of the oldest projects in northern Alberta, and suffered several setbacks this year. Mechanical problems with a boiler and a coker have hampered production this year. Part owner Canadian Oil Sands Ltd. has cut production expectations for Syncrude three times for this year, most recently predicting output between 97 million and 100 million barrels. The troubles highlight how even experienced operators struggle with complex projects in the oil sands – even after years of trying to solve problems.

"All of us are dissatisfied with the rate of progress in terms of the reliability and asset performance over the last few years," Mr. Williams said Wednesday.

Imperial Oil Ltd., which is controlled by Exxon Mobil Corp., operates the project and Mr. Williams said Suncor, which owns 12 per cent of the joint venture, is also working to solve Syncrude's long-lasting troubles. But until Syncrude is operating smoothly, expansion is off the table.

"I think we will start to see that asset performance improve. And of course the other partners have said is until that happens [they] will not grow that asset," he said. "As we start to operate it well, then the opportunities for further development may start to appear."

Any further delays will not dent Suncor's growth plans. It recently said it intends to proceed with its Fort Hills mining project, and has room to jack up production at its own operations. Canadian Oil Sands, which controls 36.74 per cent of Syncrude, has been hit hardest by Syncrude's troubles because it is its sole asset.

Two of China's three state-owned energy firms hold stakes in Syncrude. Sinopec controls 9.03 per cent, and CNOOC Ltd. owns 7.23 per cent, thanks to its Nexen Inc. acquisition.

Chinese firms aggressively hunted for stakes in Canada's oil sands as the Asian country's demand for energy skyrockets. The Syncrude joint venture gave the pair easy access to bitumen given that Imperial operates the project. China's chances of controlling a major project, however, are now extremely slim after Prime Minister Stephen Harper stiffened rules around ownership for state-controlled enterprises in the oil sands.

Canadian Oil Sands said Suncor's assessment of Syncrude is "consistent" with its plans. "Our best economics are to increase production from the assets and we believe the efforts under way with Exxon and [Imperial] will accomplish that," Siren Fisekci said. "We have plenty of resources to develop but no plans at this point to expand in the next 10 years."

Imperial Oil said it expects Syncrude to increase production through improved reliability.

Suncor also discussed its executive team, which is short a chief financial officer after Bart Demosky decamped to Canadian Pacific Railway Ltd. His resignation was announced last week and will take effect Dec. 27.

Mr. Williams plans to name an interim CFO next week, and said the company has launched an internal and external search for a permanent replacement.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 0:07pm EDT.

SymbolName% changeLast
CP-N
Canadian Pacific Kansas City Ltd
+0.02%88.48
CP-T
Canadian Pacific Kansas City Ltd
-0.32%119.69
IMO-A
Imperial Oil Ltd
+0.74%69.16
IMO-T
Imperial Oil
+0.17%93.45
M-N
Macy's Inc
-0.3%19.79
SU-N
Suncor Energy Inc
+0.96%36.83
SU-T
Suncor Energy Inc
+0.61%49.8
XOM-N
Exxon Mobil Corp
+0.67%115.74

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