Suncor Energy Inc., one of Canada’s biggest oil producers, will not sanction further expansions of crude production until it becomes clearer when new pipelines will be ready, chief executive officer Steve Williams said on Wednesday.
A court overturned last week the Canadian government’s approval of the Trans Mountain pipeline expansion. That decision added to “troubling” pipeline delays, Williams said at a Barclay’s investor conference in New York.
“There is clearly a question of confidence in Canada,” Williams said.
Suncor is currently ramping up production of its new Fort Hills mine in the Alberta oil sands and is due to decide in late 2019 and early 2020 whether to expand production at existing facilities, Williams said.
“You will not see us approve those projects until we have more clarity on pipelines,” he said. “I would want to see actual, physical progress on the ground before I would commit.”
Canadian heavy oil production in Western Canada is expanding but construction of new pipelines has not kept pace, stranding supplies in the landlocked province and deepening a price discount to North American futures.
Oil producers have eagerly awaited the expansion of Trans Mountain, owned by the Canadian government, which would move Alberta crude to a British Columbia port. TransCanada Corp’s proposed Keystone XL pipeline may be delayed by a U.S. State Department environmental review, while Enbridge Inc’s Line 3 replacement has cleared key regulatory hurdles.
Suncor has sufficient committed pipeline space for its production, including Fort Hills, Williams said, and its own refineries shield it from exposure to the price discount on Canadian heavy oil.