Calgary-based Suncor Energy says its capital program for 2019 will be between $4.9 billion and $5.6 billion. And its average upstream production will be 780,000 to 820,000 barrels of oil equivalent per day (boe/d).
The company said the midpoints of these ranges represent a flat capital spend compared to 2018 and a year-over-year production increase of about 10 per cent, including estimated mandatory production curtailments, from approximately 730,000 boe/d in 2018.
“The government of Alberta has mandated compulsory production curtailments across the industry starting Jan. 1, 2019. Although considerable uncertainty on the impacts of the curtailment remains, Suncor’s production guidance assumes the mandatory production curtailments are in place for three months before declining to 30 per cent of initial levels for the remainder of 2019. This is consistent with the government of Alberta announcement,” said the company.
“With Fort Hills successfully operating at target rates during Q4 2018 and Hebron on track to increase production ahead of schedule, our focus is on maintaining capital discipline and ensuring safe and reliable operations while growing the free funds flow of our business,” said Steve Williams, chief executive officer of Suncor.
“As we look to 2019, the planned capital spend will include low capital intensity, high-return projects aimed at margin improvements, enhancing midstream logistics infrastructure and cost reduction initiatives to be implemented in the 2020 to 2023 timeframe. All of these projects and the corresponding value they represent are largely independent of market conditions and egress constraints, positioning us well to continue returning increasing free funds flow to shareholders through dividends and share buybacks and strengthening the balance sheet.”
Suncor said the capital program is 63 per cent allocated to planned sustaining and maintenance activities to ensure continued safe, reliable and efficient operations. The remaining 2019 capital program is focused on low capital intensity, value-creating projects such as the continued implementation of autonomous haul trucks across Suncor’s operated assets, development of the Syncrude bi-directional pipeline, further investment in midstream logistics infrastructure, digital technology adoption and accelerated deployment of Suncor’s new tailings technology, PASS (permanent aquatic storage structure). Capital for previously sanctioned exploration and production step-out developments will increase in line with the anticipated spend profile. Projects such as the coke-fired boiler replacement, Montreal coker and in-situ replication will continue to be progressed to allow for informed sanction decisions at the appropriate time, it said.
“The market for Alberta’s heavy and synthetic crude oils has been significantly impacted by the lack of market access out of the region. As discussed on our Q3 earnings call, our strategy has been to mitigate such volatility by significant investment in integration between our upstream and downstream assets, such as upgrading and refining capacity, along with commitments to long-term take or pay pipeline access to markets, largely mitigating impacts to our cash flow in situations such as the one we are in,” said Mark Little, president and chief operating officer of Suncor. “Suncor has made long-term strategic investments to mitigate risk and create economic value and jobs for Albertans and Canadians.”