Resource World Magazine

64 www.resourceworld.com J U N E / J U L Y 2 0 1 7 Oil Patch Report by Bruce Lantz O ne of the happiest men in the Canadian oil patch these days has to be Steve Williams, President and CEO of oil sands giant Suncor Energy Inc. [SU-TSX, NYSE]. And why not? After coming off a solid 2016 that brought stronger-than-expected results, Calgary, Alberta-based Suncor has contin- ued with solid numbers into 2017. The company posted first-quarter funds from operations of more than $2 billion and net earnings of almost $1.4 billion, recording first-quarter 2017 operating earnings of $812 million ($0.49 per com- mon share) compared to a $500 million operating loss ($0.33/share) in the prior year quarter. Q1 highlights included improved crude price realizations combined with strong upstream production, a refining and mar- keting first-in, first-out gain and lower company-wide operating costs. Net earn- ings were $1.352 billion ($0.81/share) in the first quarter of 2017, compared with $257 million ($0.17/share) in the prior year quarter. "Our oil sands operations and offshore assets posted impressive production results and continued low operating costs, generat- ing industry-leading cash flow per barrel," said Williams in delivering the Q1 results in late April. "Our refining and marketing seg- ment also delivered another strong quarter, contributing to companywide total funds from operations of over $2 billion." The downturn has been difficult for everyone and Suncor took its share of hits, including the devastating Fort McMurray fires and another blaze in mid-March at the Mildred Lake upgrader, which shut production at the oil sands facility oper- ated by Syncrude, in which Suncor now has a majority ownership stake. Syncrude was forced to cut output and bring forward planned maintenance after the March 14 fire damaged the facil- ity which upgrades mined bitumen into refinery-ready synthetic crude. The out- age sent Canadian crude prices higher due to tight supply. But the restart of pipeline shipments at approximately 50% capacity was expected by early May, with produc- tion expected to return to full rates by the end of June. By May 1, shipments were at 140,000 barrels per day and are expected to increase as maintenance on other units wraps up, Suncor said in a statement. Production is expected to return to full rates of around 350,000 bpd in June, in line with previous forecasts. "Our commitment to operational excel- lence remains a top priority and we will continue to seek ways to become more effi- cient, including development of regional synergies with Syncrude," said Williams. "We were able to partially mitigate the impact of the Syncrude (Mildred Lake) incident by making use of Suncor's opera- tional flexibility and that's an indication of the future benefits of integration." Throughout its 50-year history, Suncor has successfully recovered from industry fluctuations and proved skeptics wrong starting with their development of the Canadian oil sands, which naysayers said could never be a commercial success. Now, Suncor is Canada's premier inte- grated energy company, the fifth largest in North America and one of the largest inde- pendent energy companies in the world. However, it isn't standing still. Suncor hopes to expand its oil sands operations until it is one of the world's largest in developing renewable energy and invest- ing in new technologies to improve its environmental performance. ''In spite of the devastating forest fires, Alberta's tough economic situation, and persistent low oil prices, we have made significant progress towards our long- term vision for the company, responsibly developing this significant resource and executing on our strategy to drive increased returns to our shareholders,'' said Williams in Suncor's 2016 annual report. Certainly 2017 is getting off to a good start. Oil Sands operations production of 448,500 barrels per day (bbls/d) included an increase in higher margin synthetic crude oil production compared to the prior year quarter, and operating costs per bar- rel decreased to $22.55 for the first quarter of 2017, a 7% improvement over the prior year quarter and a 20% improvement over the first quarter of 2015. Syncrude production increased to 142,100 bbls/d from 112,800 bbls/d in the prior year quarter due to additional ownership interests acquired during 2016, although that was partially offset by the Mildred Lake fire. As well, the exploration and production division increased produc- tion to 134,500 barrels of oil equivalent per day (boe/d) from 125,600 boe/d in the prior year quarter. The disciplined execution of Suncor's 2017 capital program will focus on bring- ing Suncor's major growth projects – Fort Hills, 90 km north of Fort McMurray in the Athabasca oil sands, and Hebron, off Canada's east coast – to first oil by year end, while continuing to invest in the safety, reliability and efficiency of the company's operating assets. Construction of the Fort Hills Project, in which Suncor has a 51% stake thanks to a 2016 acquisition, exceeded 80% at the end of Q1 2017, with the mining, ore pro- cessing plant and key infrastructure assets Suncor Energy posts strong Q1 results

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