Suncor Seeks Permission to Abandon Some Oil-Sands Assets
September 07 2016 - 6:50PM
Dow Jones News
CALGARY, Alberta—Suncor Energy Inc., Canada's largest oil
producer, is in talks with government officials for permission to
"strand," or abandon, some high cost and greenhouse gas-intensive
crude-oil deposits, the company's chief executive said
Wednesday.
The Calgary-based company is seeking an easing of rules designed
to maximize oil-sands production from leases on government land,
CEO Steve Williams said at a Barclays energy conference in New
York, reiterating a strategy he first announced in July.
"We've begun to have conversations with the government of
Alberta and the current regulators about the design of their
policy, which actually requires the maximum amount of resource to
be extracted regardless of the economic or environmental value," he
said.
The request comes as Suncor and other oil producers struggle to
cut costs amid slumping commodities prices. Oil sands are one of
the world's most expensive and are also among the most carbon
dioxide-intensive forms of crude-oil extraction.
The cost of that carbon is becoming a bigger barrier for
oil-sands producers, as the province is set to double its so-called
carbon tax on them, and has vowed to cap greenhouse-gas emissions
from oil-sands operators at 100 million metric tons.
Oil-sands producers currently emit 70 million metric tons of
greenhouse gas a year—about a quarter of the province's overall
emissions.
Those efforts to curb emissions have made Alberta a test case
for energy companies' attempts to reduce their carbon footprint.
But the policy also calls into question the ability of major oil
companies to fully develop their leases in the Canadian oil sands,
the world's third-largest oil reserves, over the long term.
The province's left-leaning government, which was elected last
year, has yet to detail how the remaining room under the planned
carbon cap will be allocated. In July, Premier Rachel Notley's
administration appointed a blue-ribbon panel of industry and
environmental experts to provide advice on how to implement the
policy.
Historically, Alberta has sought to promote maximum development
on public lands for the royalty payments they provide, so any
change could potentially affect government revenue. The Alberta
Energy Regulator is obligated to "prevent waste of the oil sands
resources" under the province's Oil Sands Conservation Act and it
has enforced that mandate through a policy known as Directive
82.
The older regulations were aimed at promoting maximum
production, Mr. Williams said. Now, the industry faces a surplus of
supply and pressure to reduce its environmental impact.
Representatives for the AER and Alberta's energy minister had no
immediate comment on the talks with Suncor.
Write to Chester Dawson at chester.dawson@wsj.com
(END) Dow Jones Newswires
September 07, 2016 18:35 ET (22:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Barclays (NYSE:BCS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Barclays (NYSE:BCS)
Historical Stock Chart
From Apr 2023 to Apr 2024