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Suncor set to return oil sands plant to full production 3 months after fire from SNL Daily Gas Report Suncor set to return oil sands plant to full production 3 months after fireByline: Gene Laverty Suncor Energy Inc. will return a giant oil sands facility to full production in early November after a fire took the plant offline in August. The fire at the Calgary, Alberta-based company's 300,000 barrel-per-day Base Plant was a major contributor to a production miss in the third quarter, President and CEO Mark Little said on a conference call. That outage, planned maintenance at other facilities and a decision to take one train of the Fort Hills oil sands venture offline contributed to a 19% year-over-year production drop in the third quarter. Little said the cause of the fire at the Base Plant was vapor exiting a tank and igniting, and although production could have been restored sooner, Suncor opted to prioritize reliability in the repair. "Our third-quarter operational performance does not reflect our commitment to operational excellence and the incident at Base Plant was extremely disappointing to all of us," Little said on the Oct. 29 call. The more cautious approach to repairs "prioritizes reliability and capital discipline by protecting the long-term health and value of our assets." Production from Suncor Energy's Base Plant oil sands facility dropped after a fire in August.Source: Suncor Energy photo Suncor mines and steams oil from sand in northeastern Alberta that it refines and sells through its network of about 1,600 Petro-Canada and Sunoco gas stations. As fuel demand rebounded from a second-quarter slump caused by the coronavirus pandemic, the company reported that its refineries had approximately 97% utilization by the end of the third quarter. While downstream sales and refinery throughput continued to lag 2019 levels, the company saw funds from operations in that business rise 25% from the second quarter to C$594 million. Canadian refiners and fuel sellers have rebounded faster than their U.S. peers in the wake of the pandemic because of access to lower-priced heavy oil and a less-crowded retail market. Little said it is unlikely that the company would follow Canadian rivals like Imperial Oil Ltd. in selling its retail network. "You see it in the downstream results when we're 15% above the Canadian market," Little said. "We think this direct connection to the consumer and seeing the change in consumer habits and behaviors has been a real advantage in being able to deliver the downstream results." The company has also taken steps to adapt to the energy transition as it moves to renewable and less-polluting natural gas power at its facilities. Suncor operates Canada's only coast-to-coast fast-charging network for electric vehicles and owns Canada's largest ethanol production facility. On a "wells-to-wheels" basis, greenhouse gas emissions to produce oil sands from the company's Fort Hills venture is comparable to the average crude barrel refined in the U.S., Little said. READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here. With the recently announced takeover of rival integrated oil company Husky Energy Inc. by Cenovus Energy Inc., speculation has increased about further consolidation in the Canadian oil industry. While Little did not rule out future acquisitions, he said the company would not waver on its high standards for potential transactions. "We did not cut our capital budget, operating costs and reduce our dividend to leverage up our balance sheet to do M&A," he said. Separately Oct. 28, Suncor reported an operating loss of C$302 million for the third quarter, down from operating earnings of C$1.11 billion in the same period a year ago. Net loss for the quarter was C$12 million, compared with net earnings of C$1.04 billion in the prior-year quarter. The net loss for the quarter included a C$290 million unrealized after-tax foreign exchange gain on the revaluation of U.S. dollar-denominated debt. |
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