Achi news desk-
Suncor Energy Inc. says that it leases and operates a number of Aframax oil tankers to transport crude from the recently completed Trans Mountain pipeline expansion to Pacific markets.
By leasing and operating the tankers itself, Suncor saves on shipping costs, said Dave Oldreive, the company’s executive vice president of refining, sales and marketing.
“We are well positioned to deliver volumes to our customers and remove that middleman and capture the full value for Suncor,” Oldrieve said on a conference call with analysts Wednesday, when executives discussed the company’s first-quarter financial results .
The Trans Mountain pipeline expansion, which runs from Alberta to the BC coast and marked its official opening last week, gives Canadian oil shippers access to an additional 590,000 barrels per day of pipeline capacity.
The expanded pipeline will “significantly increase” the profitability of Suncor’s oil sands production, Oldreive said, by reducing the discount that Canadian oil shippers have historically received for their output due in part to a lack of export capacity.
It also enables future production growth, for Suncor and the oil sands sector as a whole, he added.
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“We’ve been waiting for this for some time, and we’re excited to get shipping underway. It’s good for our industry, it’s good for Suncor,” said Oldreive.
According to numbers provided by the Canadian Energy Regulator, the Trans Mountain pipeline expansion is expected to boost western Canada’s total crude oil export capacity by 13 percent once it is in full service. (While officially opening, the pipeline is still filling with crude, and the first tanker is not expected to load from the new line for export until the middle of the month.)
Overall, the capacity of the Trans Mountain expansion will represent 17 percent of the total pipeline export capacity available to Canadian crude oil shippers, according to the Canadian Energy Regulator.
Oldrieve said on a call Wednesday that Suncor expects the crude oil offloaded from the Trans Mountain pipeline onto tankers at the Westridge Marine Terminal in Burnaby, B.C., will be delivered primarily to California markets as well as Asian markets.
He said Suncor’s trading offices in Calgary, Houston and London, England have been working to strengthen relationships with customers along the West Coast and in Asia to take advantage of the opening of the Trans Mountain project.
“We have a fairly sophisticated trading platform. And what might make us a little bit unique is that we don’t rely on third-party trading stores,” said Oldrieve.
“This enables us to capture the full value of the transaction by dealing directly with customers.”
Eighty percent of Trans Mountain’s pipeline expansion capacity is tied to long-term contracts with crude oil carriers, leaving the remaining 20 percent available for month-to-month spot shipments.
Contracted oil carriers, including Suncor, are currently locked in an ongoing dispute with Trans Mountain Corp. about the increasing tolls that the Crown corporation wants to charge to move their product in pipeline.
The establishment of Trans Mountain coincides with increased output from Western Canadian oil companies. In Alberta in particular, oil output reached a record production of 4.53 million barrels per day in December 2023, Canadian Energy Regulator figures show.
Suncor itself said in a news release after markets closed Tuesday that it earned $1.61 billion in the first three months of 2024, down from $2.05 billion a year earlier.
The company reported record upstream production of 835,000 barrels per day during the quarter, including a record high oil sands production of 785,000 barrels per day.
The company also said it achieved record sales of refined products of 581,000 barrels per day, and saw its first quarter refining throughput record at 455,000 barrels per day with overall refinery utilization of 98 percent.
Suncor has scheduled a presentation for investors on May 21, when it said it will provide an update on the progress made by the company to lower its costs and increase shareholder returns.
CEO Rich Kruger, who came to lead the energy giant amid growing pressure from investors for the company to improve its safety record and operational performance, has now been at the helm for just over a year.
& copy 2024 The Canadian Press
