December 13, 2007 / 12:39 AM / in 10 years

Suncor CEO: deal is possible on Alberta royalties

<p>Rick George, president and chief executive of Suncor Energy Inc., smiles at an annual general meeting in Calgary, Alberta, April 26, 2007. George said on Wednesday he is optimistic that the major oil sands producer can strike a deal with the Alberta government on changes to its royalty structure. REUTERS/Todd Korol</p>

HOUSTON (Reuters) - Suncor Energy Inc’s (SU.TO) chief executive said on Wednesday he is optimistic that the major oil sands producer can strike a deal with the Alberta government on changes to its royalty structure.

“Those discussions are ongoing,” Suncor CEO Rick George told Reuters in an interview at Deloitte’s 2007 Oil & Gas Conference. “We’re very optimistic.”

Suncor is the second-largest producer of synthetic crude from Canada’s oil sands. Alberta recently announced hikes to royalties.

Negotiations with Suncor and Syncrude Canada are required because they have prior royalty contracts.

George did not give specifics on what offers or counteroffers have been made. Alberta gave the companies 90 days to make a new deal. That period ends in January.

George said Suncor executives “fully understand” that the resources belong to Alberta and are “very supportive of reaching agreement.”

“We see no reason why a reasonable solution cannot be found,” George said.

On another topic, George said Suncor would consider buying another U.S. refinery if the right opportunity came along. The company currently operates a refinery in Denver.

Likely purchase prices have been too high recently because refining margins have been high, he said, but margins have dropped lately.

He said a refinery would be located within pipeline reach of Suncor’s oilsands production. If conversions are necessary to use synthetic crude, cost of those also would be key, he said.

“We’re always in the market looking,” George said. “Denver has worked very well. We’re hoping as margins come off there’ll be other opportunities.”

Editing by Jeffrey Jones editing by Matthew Lewis

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