CALGARY, Alberta, May 2 (Reuters) - Suncor Energy Inc said on Wednesday that its current growth plan is not constrained by pipeline bottlenecks and it does not expect to make any further major investments in Canada’s oil sands until market access improves.
The Calgary-based company, Canada’s second-largest energy producer, will continue to look at assets available in the market, but is “not chasing anything,” Chief Executive Steve Williams said on an investor call.
“The real strength of our growth plan for the next five or six years is our high level of certainty, and it’s not constrained by market access issues,” he said. “We have existing pipeline access to accommodate all of our oil sands production.”
Canadian energy producers are struggling as increased oil sands output has run up against a lack of new export pipelines and tight rail capacity, sending the differential between Canadian oil prices and the U.S. crude benchmark to multi-year highs.
Suncor said that while the discount Canadian producers face nearly doubled in the first quarter compared with last year’s quarter, it had no impact on the company’s earnings or cash flow, as low crude prices were offset by better midstream and downstream returns.
New pipeline capacity is desperately needed to help Canadian producers fetch better prices for their product, but there are challenges. Kinder Morgan Canada has stopped non-essential work on its Trans Mountain expansion in face of opposition from the province of British Columbia, while Enbridge Inc’s Line 3 replacement is facing new hurdles in Minnesota.
Williams said he had spoken with Canadian Prime Minister Justin Trudeau on the importance of getting those pipeline built and was confident that two projects, along with others moving crude south, will move ahead.
“I don’t think in the last five years I’ve had a higher degree of confidence that these lines are going to be built,” he said. “So I’m greatly encouraged.”
Suncor shares were up 0.5 percent at C$49.10 on Wednesday morning. (Reporting by Julie Gordon in Calgary Editing by Marguerita Choy)
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