Suncor Energy Inc. is delaying a planned maintenance shutdown at its Base Plant oil sands mine upgrader until at least June, as Alberta scrambles to rein in a surge of COVID-19 cases that has resulted in a state of emergency being declared in the Fort McMurray region.
Thousands of people who work on oil sands site maintenance usually fly to the region from other parts of Canada and stay for weeks in work camps. But travel restrictions, limited flights and the country’s highest rate of active COVID-19 cases – combined with the fact that several other industry players are also trying to get maintenance done – have restricted the number of workers available.
Chief executive officer Mark Little told The Globe and Mail Tuesday that Suncor’s decision to delay Base Plant maintenance was “a prudent risk-management call.”
Instead, the company is focusing on its Syncrude oil sands operation and its Edmonton refinery. Getting that work done before switching its attention to Base Plant “made a lot of sense to us,” Mr. Little told an investor call Tuesday morning.
“Our view was that the labour situation was already stretched, and the last thing we wanted to do was over-stretch that,” he said.
Mr. Little told The Globe that the pace of the vaccine rollout in Alberta has him hopeful that work can ramp up soon.
“It’s amazing how in Canada and in Alberta, in one month, how much vaccinations have changed. We think another month could be really helpful to us here, that’s why we made the call,” he said.
Suncor was part of the first group of oil sands companies to introduce COVID-19 rapid testing at its work sites. The idea, Mr. Little said, was for big companies with large labour forces to “develop a playbook” on how rapid testing can be successfully rolled out.
The next step is working with Alberta Health on a plan to increase vaccinations among workers.
“We’re expecting and hoping that we’ll be able to roll that out either to our Base Plant or into Syncrude,” Mr. Little said.
Delayed maintenance is not the only pandemic-related challenge facing Suncor.
Even as the company remains confident that oil demand will continue to grow as the Canadian economy improves, it has yet to make a decision on the future of its Terra Nova production storage and offloading vessel, which usually operates about 350 kilometres off the coast of Newfoundland and Labrador but requires critical work to remain seaworthy.
That work was slated for 2020, but plans were scuttled by the pandemic, which closed ports around the world. It meant Suncor couldn’t get Terra Nova to Spain to complete vital improvements.
As a result, the vessel has been languishing dockside at the Bull Arm Fabrication Site on the Avalon Peninsula.
Last week, Suncor issued a call for expressions of interest, asking suppliers to submit proposals to either remediate or decommission Terra Nova.
“We have to decide on a path forward. Can we get this work plan put together and allow the Terra Nova to produce for the next decade? Or has it come to its end of life and we abandon it?” Mr. Little said.
He’s not sure when that decision will be finalized, but said Suncor is accepting proposals for both options “to try and understand the work force, and the cost of one path versus another path.”
Every company has “stretched their balance sheet in the last year,” Mr. Little said, so there’s less money floating around and, therefore, fewer investments being made.
“That’s the challenge with it. We’re working to get Terra Nova through this, but not every project globally is going to make it through this discussion,” he said.
But Mr. Little said Suncor hasn’t given up on Terra Nova, and will continue to work with the federal and provincial governments to find a path forward.
“We think it’s very important for Suncor to get this to successful completion,” he said.
“I’m hoping that in the next month or so we bring this to resolution.”
Suncor reported positive first-quarter net earnings Tuesday on higher production, lower costs and stronger oil and gas prices, reversing a big net loss in the same period of last year. It said it had net earnings of $821-million, or 54 cents a share, in the first three months of 2021, compared to a net loss of $3.5-billion, or $2.31 a share, in the year-earlier period.
With a report from The Canadian Press
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