Canadian Oil Sands Ltd. is hoping to turn the corner on a tough year for Syncrude Canada Ltd., one of country’s largest oil-sands projects.
Canadian Oil Sands is the largest shareholder in Syncrude, where operational problems forced Canadian Oil Sands to cut its production targets three times in 2013.
Syncrude’s troubles, which stretch back years, highlight how projects struggle with age. It is one of the founding projects in the oil sands.
Canadian Oil Sands’ outgoing chief executive, Marcel Coutu, said he expects Syncrude to return to “more typical” production numbers in 2014.
“Syncrude’s production performance in 2013 has been disappointing and is not reflective of what has been demonstrated in the past, nor what we expect in going forward,” he said. “Exiting 2013, we are seeing a return to more reliable operation.”
Canadian Oil Sands predicts Syncrude will produce 95 million to 110 million barrels in 2014.
Canadian Oil Sands hopes retrofitting and rebuilding some of its machinery will help solve its problems. Troubles at a boiler and coker hampered Syncrude throughout the year. Imperial Oil Ltd., which is controlled by Exxon Mobil Corp., operates the mega-project.
Despite Canadian Oil Sands’ outlook on Syncrude, some analysts remain cautious.
“A lot of companies keep suggesting they are encouraged by what they see, but so far, that hasn’t translated into any sustained improvement in production,” said Randy Ollenberger, an analyst at BMO Capital Markets.
Mr. Coutu said Syncrude and Suncor Energy Inc. have discussed ways they could share facilities. Suncor owns roughly 12 per cent of Syncrude, while Canadian Oil Sands controls 36.74 per cent of the project.
“We have discussed interconnecting pipelines of various sorts. Some of them are probably economic today and therefore the potential is there,” Mr. Coutu said. He listed “inter-tying” pipelines and storage options as possibilities.
“We are evaluating some investments and as soon as we have something that we can talk about, we will be very keen to come forward.”
Mr. Coutu will leave his position as president and chief executive on Jan. 1, 2014. Canadian Oil Sands’ board promoted the company’s chief financial officer, Ryan Kubik, to the top spot. Rob Dawson, currently a vice-president in the finance department, has been tapped to serve as CFO.
|XOM-N Exxon Mobil||102.49||
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|IMO-T Imperial Oil||56.75||
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