The CEO of Suncor Energy Inc. says the Alberta government’s decision to end its oil production curtailment program in December after almost two years is “a very positive signal” for the oilsands and refining giant.
On a conference call, Mark Little says the end of the quota system imposed to support oil prices will allow Suncor to operate “unencumbered” as it recovers from nine months marked by low oil prices, the COVID-19 pandemic disruptions and a fire in August that hurt production at its base oilsands mining operations.
In the wake of a proposed merger of oilsands rivals Husky Energy Inc. and Cenovus Energy Inc., Little says Suncor is more concerned with improving operational performance and strengthening its balance sheet than taking on debt to grow by acquisition.
Suncor reported a third-quarter operating loss of $302 million as revenue fell 34 per cent to $6.5 billion compared with the same period of 2019, when it earned $1.114 billion on revenue of $9.9 billion.
It said oil and gas production fell to 616,000 barrels of oil equivalent per day in the third quarter from 762,000 boepd in the year-earlier period, while refinery output fell to 399,700 barrels per day or 87 per cent utilization from 463,700 bpd or 100 per cent.
The company, which announced in early October it will cut as many as 1,930 jobs over 18 months to reduce total staff by 10 to 15 per cent, said it is on track to achieve its $1-billion operating cost reduction target by the end of 2020.
Suncor has been opposed to the Alberta oil quotas since they started in 2019.
“The indication is that the government does not plan to resume production limits and this is a very positive signal for us and we’re really looking forward to this being a fully unencumbered market,” said Little on the call.
“We will be agile and disciplined as we consider the impact of these changes on our production plans for Fort Hills.”
Production at the 194,000-barrel-per-day Fort Hills oilsands mine was throttled back because of the quotas. Early this year, Suncor shut down one of its two production trains because of low oil prices.
The train was restarted in September and Little said it is on track to achieve overall production of between 120,000 and 130,000 bpd in the current quarter, with growth beyond that to be ramped up gradually to ensure cost savings are retained.
Suncor announced this week it plans to move its Petro-Canada refining and retail branch head office to Calgary from southern Ontario next year. On the call, Little said some of the 700 associated jobs will be lost as part of its overall workforce reductions.