Suncor Energy will delay decisions regarding the sanctioning of planned oil sands projects as it assesses the quality and cost of the projects.
Decisions regarding sanctioning of Suncor's Oil Sands Ventures business projects had been targeted to occur in mid-2013. Suncor has not yet set new target dates for those projects, the company reported last week its third quarter 2012 earnings.
The company is focusing its project reviews on cost and quality "with a view to generating long-term value for shareholders," Suncor said in a statement.
"At the start of the year, we said that cost and quality metrics would be Suncor's priorities when executing growth projects," said Steve Williams, Suncor president and chief executive officer. "We're delivering on these goals by spending capital efficiently and maintaining a disciplined approach to pre-sanction spending on our operated growth projects."
Suncor's planned oil sands projects' include the Voyageur upgrader, the third upgrader at Suncor's oil sands upgrading operations in Fort McMurray, Alberta. Voyageur, which Suncor jointly owns with Total E&P Canada, will add 200,000 barrels per day of upgraded product capacity, including premium synthetic crude oil, ultra-low sulphur diesel and low sulphur diluent.
The company also has entered a joint venture with Total to develop the Fort Hills and Joslyn oil sands mining projects at Suncor's oil sands mining operation near Fort McMurray.
Both Fort Hills and Joslyn are currently looking attractive to Suncor, Williams told analysts during a conference call last week. Both programs have support and are funded through the next stages in their development and are looking good, though the Fort Hills' production timeline is likely to be delayed about a year to 2017.
However, economics for the Voyageur upgrader project appear slightly more stressed; Williams noted they were looking very aggressively to improve the project's scope and cost versus the company's hurdle rates.
Wood Mackenzie reported in a June 2012 study that the surge in U.S. tight oil production, primarily North Dakota's Bakken oil play, and pipeline bottlenecks to bring Canadian oil sands south could result in unsanctioned oil sands projects being delayed or cancelled.
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