Alberta oil cuts, close-the-taps bill are unwelcome interventions: Suncor CEO

CALGARY — The new CEO of Suncor Energy Inc. says he doesn’t want the Alberta government to carry through on its threat to cut off shipments of oil and refined products to B.C. if its western neighbour continues to interfere with pipeline growth.

Following the company’s annual meeting in Calgary on Thursday, Mark Little said any such action resulting from the proclamation of Bill 12 by the new United Conservative government this week would create a barrier between Suncor’s refinery assets in the Edmonton area and its customers in British Columbia.

He said Suncor is using the Trans Mountain pipeline to the West Coast now to bring gasoline and diesel to the B.C. market and it supports pipeline expansion so that it can grow that market.

“We’re hoping that through the government’s negotiations this can get sorted out, because the last thing we want to do is have an impediment in serving our customers,” he said.

He added he views the Alberta bill as “a fairly significant intervention into a market to try to resolve a dispute.”

Earlier in the day, Little told analysts on a conference call that Suncor remains opposed to another Alberta market intervention, its oil production curtailments, in spite of their “slightly positive” impact on first-quarter financial results.

The results show the value of Suncor’s integrated business model and extensive pipeline contracts at a time of turmoil in the industry, he said.

“In the fourth quarter of 2018, there were low benchmark prices with wide heavy and light crude oil differentials. Whereas, in the first quarter of 2019, there were higher benchmark prices and narrow differentials,” Little said.

“Both quarters, we were able to generate significant funds from operations.”

Little officially took over as chief executive from Steve Williams at the annual meeting in downtown Calgary. Williams was given a standing ovation by shareholders after a speech about the company’s accomplishments during his seven years as CEO.

Alberta’s decision to impose quotas on its biggest oil producers was designed to free up pipeline space and draw down crude storage after price discounts on western Canadian oil spiked last autumn.

The move is supported by oilsands producers like Cenovus Energy Inc., whose CEO pointed out last week the resulting higher prices have helped boost royalties to Alberta’s treasury.

But it’s opposed by rivals such as Imperial Oil Ltd. and Husky Energy Inc. who note that crude-by-rail exports plunged to 131,000 barrels per day in February from an all-time high of 354,000 bpd in December — which means oil export capacity was actually reduced.

Both points are accurate, said Little, but he added the confusion means Suncor and others are reluctant to spend money on new projects.

The UCP government has supported curtailments brought in by the NDP.

 

Photo by THE CANADIAN PRESS Suncor president and CEO Mark Little prepares to address the company’s annual meeting in Calgary, Thursday.

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