CALGARY — Shares in Suncor Energy Inc. fell Monday after it reported it will be early September before bitumen production resumes at its base oilsands mining operation in Fort McMurray, Alta., following a fire on Friday.
The Calgary-based company’s stock fell by as much as 37 cents or 1.6 per cent to $22.20 on Monday after it released an update on operations in the wake of the blaze in the extraction area of the mine.
The fire was contained quickly, extinguished several hours later and no one was hurt, it reported.
Suncor said its two upgraders at the oilsands project are working at minimum rates to process strip-mined bitumen inventory, as well as production piped in from its other operations that use steam to produce bitumen from shallow wells.
The ability to process alternate streams of bitumen at the upgraders — thus creating a synthetic crude product that sells for a higher price than raw bitumen — could alleviate some of the feared impact of the shutdown, analyst Michael Dunn of Stifel FirstEnergy pointed out in a report.
“Our understanding is that Suncor has the logistical capabilities to deliver approximately two-thirds of its (in situ) Firebag bitumen production … but will certainly be looking to draw down bitumen inventories and also move some bitumen production from its Mackay River project (about 30,000 bpd) to the upgraders,” he said in a report.
“These efforts would represent potential upside to our new financial estimates.”
The outage will likely translate into a 70,000-bpd shortfall in upgraded production in the third quarter, translating to about five per cent less free cash flow for Suncor, Dunn estimated.
Regulators have been notified and maintenance planned for the third quarter has been accelerated in advance of a return to normal mining operations, Suncor said.
The company has not released a cause of the fire but says it will have a further operational update by early next month.
In late-afternoon trading, Suncor shares were down 21 cents or 0.9 per cent to $22.36.
This report by The Canadian Press was first published Aug 17, 2020.
Companies in this story: (TSX:SU)
The Canadian Press