The Calgary-based oil sands producer and refiner cut its 2021 production guidance for Fort Hills in northern Alberta to between 45,000 and 55,000 barrels per day, from a previous 65,000 to 85,000 barrels per day. The company also increased its guidance for operating costs per barrel at Fort Hills, to $37 to $42 per barrel from a pervious $25 to $29 per barrel.
Suncor shut down one of its production trains at Fort Hills – which is jointly owned by Suncor and minority partners Total E&P and Teck Resources Ltd. – last year as oil prices collapsed during the COVID-19 pandemic. It restarted the second train late last year and had planned to ramp up to full capacity later this year.
However, chief executive Mark Little said Thursday the company recently identified an issue with slope stability on the south side of the mine. Work to restore the integrity of the slope is underway, but Suncor will not be able to restore the production train to full capacity until 2022.
“This is just a time issue, we don’t think it has any fundamental impact beyond just delaying the ramp-up of Fort Hills,” Little said on a conference call with analysts.
Fort Hills is Alberta’s newest oil sands mine. It started production in 2018 and has an estimated lifespan of 50 years, with peak daily production estimated at 194,000 barrels per day.
Late Wednesday, Suncor Energy Inc. announced it swung to an $868-million profit in its latest quarter on increased oil output a year after COVID-19 prompted an unprecedented decline in transportation fuel demand.
Suncor reported it earned 58 cents per share, up from a loss of 40 cents per share or $614-million a year earlier.
Its operating earnings excluding some one-time items was $722-million or 48 cents per share, one cent per share below forecasts by financial data firm Refinitiv.
That compared with a loss of $1.35-billion or 88 cents per share in the second quarter of 2020.
Suncor’s total production over the three months ended June 30 increased to 699,700 barrels of oil equivalent per day, compared with 655,600 boe/d in the prior year quarter due to strong oil sands production partially offset by planned maintenance at Syncrude. The company set a new quarterly record for in situ production, with 253,000 boe/d.
“Our operating performance from November to June of 2021 marks the best months of production from our oil sands operation assets in our company’s history,” Little said on Thursday’s conference call. “That’s the best eight months of production in 50-plus years.”
Net synthetic crude oil production increased to 437,200 barrels per day, up from 436,600 bbls/d a year earlier as upgrader utilization increased three percentage points to 96 per cent.
The company says fuel demand in the quarter was about 13 per cent below the pre-COVID period in 2019, but the lifting of many restrictions in July has reduced that shortfall to six per cent.
Little said as COVID-19 restrictions continue to be lifted worldwide and the global economy improves, the outlook for Suncor looks bright.
“Demand has recovered significantly, even in July versus the second quarter, so we think we’re really well set up for the back half of the year,” he said.
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