Tuesday, September 21

Suncor Cuts Fort Hills Oil Output Guidance Amid Mine Instability


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(Bloomberg) — Suncor Energy Inc. cut its full-year production guidance at its Fort Hills oil sands mine to between 45,000 and 55,000 barrels a day from a previous 65,000 to 85,000 barrels a day because of additional required work on the mine.

Instability on the south side of the mine requires so-called overburden removal to occur, which is to be completed by the end of the year, the company said in its second-quarter earnings release. Fort Hills will continue at the current production level for the remainder of the year and “transition to both primary extraction trains” by late 2021 to reach full production in early 2022. Fort Hills cash operating costs have also been updated to between C$37 and C$42 a barrel from C$25 to C$29 a barrel.

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Suncor shut one of the two so-called production trains at its Fort Hills mine last year as oil prices and demand collapsed because of the Covid-19 pandemic. The company resumed operation of the second train late last year and had planned to transition to operating both trains at normal rates during the third quarter.

JPMorgan Chase & Co. cut its price target for Suncor to C$32 from C$34 after Teck Resources Ltd., a minority shareholder in the mine, reduced its 2021 production guidance from Fort Hills due to operational issues.

Fort Hills, the newest oil sands mine in Alberta, started operation in 2018 and has the capacity to produce almost 200,000 barrels a day. Output hasn’t exceeded about 125,000 barrels since May 2020, Alberta Energy Regulator data show.

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