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A Suncor upgrader at work at the company’s oil sands operations north of Fort McMurray, Alta.
A Suncor upgrader at work at the company’s oil sands operations north of Fort McMurray, Alta.
(FRED LUM/THE GLOBE AND MAIL)

DAVID PARKINSON

Suncor woes a harbinger of wider crisis in oil sands

Suncor Energy Inc.’s $1.5-billion writedown on its stalled Voyageur bitumen upgrader project is evidence that the oil sands’ serious transportation and pricing issues are more than just a passing nuisance. They threaten to choke the life out of an industry.

An impairment writedown is, in essence, a public acknowledgment that a project can’t generate the future returns to justify the value assigned to the asset on the company’s books. Suncor’s assessment of the future cash flows it can expect from Voyageur prompted it to peg the carrying value of the project – on which more than $4-billion has already been spent – at just $345-million.