Negotiations on commercial deals to improve reliability at the problem-plagued Syncrude oilsands mine and upgrader need to “make sense for all parties,” the CEO of its second-largest owner said on a conference call Friday.
Rich Kruger of Imperial Oil Ltd., which owns 25 per cent of the four-decades-old project in northern Alberta, said his company is co-operating in discussions to find ways to improve Syncrude performance, especially after a power outage in June shut down the 350,000-barrel-per-day project.
On Thursday, Steve Williams, CEO of majority owner Suncor Energy Inc., said other partners in Syncrude don’t have a “sense of urgency or support” to negotiate a commercial deal, noting there’s a proposal to build pipelines to connect Syncrude with the nearby Suncor Base Plant to allow greater integration of production operations.
READ MORE: Partners holding up Syncrude improvements: Suncor CEO
Imperial is “focused like a laser” on changes to the corporate structure at Syncrude to make it more efficient, Kruger said on the call to discuss second-quarter results, without referring specifically to Williams’ remarks.
He said Imperial and its American parent company, ExxonMobil, have 120 people seconded to Syncrude under their management services contract and there is already co-operation with Suncor on regional logistics and warehousing.
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“Now we’re looking at … are there commercial arrangements that can be constructed that can help on both sides of the fence and I think, like all commercial arrangements, they need to make sense for all parties in the deal,” he said.
“And we are working on a belief there are commercial enhancements that can be achieved here at Syncrude. If it can enhance value at Syncrude, we are 100 per cent behind it.”
The Syncrude upgrader has been partially repaired since the June incident but isn’t expected to return to full operation until September.
READ MORE: Suncor says Syncrude to ramp up to full production in early to mid September
The Syncrude consortium also includes subsidiaries of Chinese companies Sinopec and CNOOC. Suncor’s share in Syncrude has grown from about 12 per cent to the current 58.74 per cent over the past three years through the purchase of Canadian Oil Sands Ltd. and minor stakes owned by Mitsubishi Corp. and Murphy Oil.
Imperial reported a profit of $196 million or 24 cents per share in the three months ended June 30, beating the year-earlier loss of $77 million or nine cents, but falling short of analysts estimates of $495 million or 53 cents per share according to Thomson Reuters Eikon.
Total revenue was $9.5 billion, up about $2.5 billion from a year earlier, and ahead of estimates of $8.8 billion.
The results were rated “negative” by analyst Nick Lupick of AltaCorp Capital due to a material miss on cash flow linked to the higher-than-expected impact of planned maintenance.
Imperial is poised to improve its performance in the second half of the year after completing its major maintenance programs, notably at its Edmonton-area Strathcona Refinery, and the disappointing performance of Syncrude in the quarter, Kruger said.
The Calgary-based company will update its plans for its proposed two-phase, 150,000-barrel-per-day Aspen project, which will use solvent and steam to produce bitumen from wells, at its investor day in October or November, Kruger said.
He repeated criticism of the length of time it has taken the Alberta Energy Regulator to produce a decision for the $2.5-billion-per-phase project, noting an application was first submitted in 2013 and the regulator ruled its environmental impact assessment was complete in 2016.
AER spokeswoman Cassie Naas said the review period was prolonged due to changes to the application and First Nation consultation adequacy requirements, adding a hearing is expected to be called by commissioners who are reviewing application materials and statements of concern.
Several different applications have been submitted at different times since December 2013 with the most recent, for Public Lands Act approvals, submitted in May 2017, she said.
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