Suncor president and CEO Mark Little prepares to address the company’s annual meeting in Calgary, Thursday, May 2, 2019.THE CANADIAN PRESS/Jeff McIntosh

Suncor cuts $1.5 billion from budget to cope with low oil prices, virus impact

CALGARY — Oilsands giant Suncor Energy Inc. is putting projects on hold and cutting its 2020 capital budget by 26 per cent to deal with lower oil prices linked to a market share battle between Saudi Arabia and Russia, as well as lower demand for fuel because of the COVID-19 pandemic.

The Calgary-based producer, refiner and operator of Petro-Canada service stations is slashing its 2020 capital spending budget by $1.5 billion to a range between $3.9 billion and $4.5 billion.

“The simultaneous supply and demand shocks are having a significant impact on the global oil industry,” said Suncor CEO said Mark Little in a statement late Monday.

“We are adjusting our spending and operational plans to be prepared in the event the current business environment persists for an extended period of time.”

The company’s shares closed at $17.42, a gain of $2.01 or 13 per cent, in Toronto on Tuesday. They were trading at more than $40 per share late last month.

“We have made some decisions to defer some work and some of these decisions will have an immediate impact on our contractors and will potentially impact some employees,” said spokeswoman Erin Rees in an email.

“We take our commitment to put people first to heart and we don’t make these decisions lightly.”

Suncor’s cuts follow billions in spending reductions by other major oilsands players including Canadian Natural Resources Ltd., Cenovus Energy Inc. and Husky Energy Inc.

Suncor reduced its 2020 production guidance by 60,000 barrels of oil equivalent per day to about 760,000 boe/d.

In view of low bitumen prices, it plans to go from two production trains to one at its Fort Hills oilsands mine and will delay returning its MacKay River thermal oilsands project to service until May after it was shut down in December due to an operational problem.

“Overall, the corporate update shows more aggressive reductions in capex and production than we had made in our preliminary estimate adjustments a couple weeks ago,” said CIBC analyst Jon Morrison in a report.

“Albeit, this is unsurprising as the macro market has deteriorated since that time.”

As a result of spending deferrals, Suncor is pushing back its medium term target of adding $2 billion in incremental annual free cash flow improvements from to 2025 from 2023.

Suncor says some projects are being shelved for up to two years, including a $1.4-billion plan announced in September to install two cogeneration units at its Oil Sands Base Plant in northern Alberta that would have reduced greenhouse gas emissions.

The company is also halting work on a new $300-million wind power plant in southern Alberta approved in December.

Despite the deferral, Rees said the company remains committed to its goal of reducing the greenhouse gas intensity of its operations by 30 per cent by 2030.

On Sunday, Husky announced it would suspend major construction work on the West White Rose Project off Newfoundland.

Suncor has a 26 per cent interest in the project, which is about half completed and was expected to produce 75,000 barrels per day of oil when on stream in 2022.

Construction of connecting pipelines to enhance synergies between Suncor’s Base Plant and nearby Syncrude oilsands operations are to proceed, along with the deployment of driverless haul trucks at Fort Hills.

Suncor says it will reduce total operating expenditures across the business by more than $1 billion this year, versus $11.2 billion of expenditures in 2019.

It said it expects generally lower demand for its refined products but has not yet adjusted guidance because of “significant uncertainty” as to how far demand will fall.

This report by The Canadian Press was first published March 24, 2020.

Companies in this story: (TSX:SU, TSX:CVE, TSX:CNQ, TSX:HSE)

Dan Healing, The Canadian Press


Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Shaun Janse van Rensburg, a Red Deer resident, said he is tired of changing clocks twice a year. Photo by Mamta Lulla/Advocate staff
After COVID, Kenney may consider referendum on daylight savings

Albertans may be divided on several issues today, but there’s a consensus… Continue reading

COVID-19-death toll in Alberta reached 309 according to numbers posted on the province’s website Tuesday afternoon. (Image courtesy CDC)
Another 422 COVID cases reported in Alberta and two more deaths

The Alberta government confirmed 422 COVID-19 cases Tuesday and two more virus… Continue reading

test tube with the blood test is on the table next to the documents. Positive test for coronavirus covid-19. The concept of fighting a dangerous Chinese disease.
COVID-19 death toll verges on 10,000 as second wave continues to surge

Nearly 10,000 Canadians have died due to COVID-19, a mark of the… Continue reading

The Red Deer RCMP has filed another set of charges after an alleged assault at an anti-racism rally on Sept. 20. (File photo by Advocate Staff)
More assault charges filed after Sept. 20 anti-racism rally in Red Deer

Trevor Lyle Roy faces a second set of charges stemming from the event

Your weather forecast for Thursday, August 1st, 2019. (Pixabay)
Expect a slightly windy day in Red Deer Tuesday

Expect a slightly windy day in Red Deer. Although as of noon… Continue reading

Alice Kolisnyk, deputy director of the Red Deer Food Bank, says the agency expects an increase in demand as the COVID-19 pandemic continues. Every new subscription to the Red Deer Advocate includes a $50 donation to the food bank. (Photo by BYRON HACKETT/Advocate Staff)
Support the food bank with a subscription to the Red Deer Advocate

The community’s most vulnerable members are always in need of a hand,… Continue reading

Minister of Families, Children and Social Development Ahmed Hussen rises during Question Period in the House of Commons on Parliament Hill in Ottawa on Tuesday, Sept. 29, 2020. THE CANADIAN PRESS/Justin Tang
Feds split rapid-housing cash between big cities, offer up rest for projects

Feds split rapid-housing cash between big cities, offer up rest for projects

Cilantro and Chive Owner Rieley Kay is set to open a second location, this time in Red Deer. (Todd Colin Vaughan/Lacombe Express)
Cilantro and Chive excited to open second location

New spot will open early in 2021 and is located near Westerner Park

Cases in Ponoka (East Ponoka County) as of Oct. 27. (
Diagnosed cases of COVID-19 at three Ponoka businesses

Town ‘strongly encouraging’ residents to wear non-medical masks in public

Red Deer Rebels forward Jayden Grubbe is one of three Rebels on the NHL Central Scouting players to watch list for the 2021 NHL Draft. (Photo by BYRON HACKETT/Advocate Staff)
Three Rebels on 2021 NHL Central Scouting Players to Watch list

A trio of Red Deer Rebels has caught scouts’ eyes ahead of… Continue reading

Kathleen Finnigan, who was named superintendent of the Red Deer Regional Catholic School Board on Tuesday, has more than 30 years of experience as an educator. (Courtesy of Red Deer Regional Catholic Schools)
Kathleen Finnigan named Red Deer Regional Catholic Schools superintendent

The Red Deer Regional Catholic School Board will continue to be led… Continue reading

(Emily Jaycox/Bashaw Star)
Wreath laying ceremony held in Manfred, Alta.

Ceremony marks 64th anniversary of Hungarian revolution, honours settlers

The Red Deer Regional Hospital Centre could be affected by cuts to Alberta Health Services announced by the government Tuesday. (Photo by BYRON HACKETT/Advocate Staff)
David Marsden: Yes, we know how to do laundry

Union leaders would have us believe there’s something special about their members:… Continue reading

Most Read