Suncor demands Alta. end oil curtailments

Suncor Energy Inc. is calling on the Alberta government to make an earlier-than-planned exit from the oil curtailment program it enacted on Jan. 1 because of its “unintended consequences.”

The program designed to draw down crude storage levels and free up space on export pipelines has worked too well, reducing local price discounts to the point that shipping crude by rail into the United States is no longer financially sustainable, said CEO Steve Williams on a conference call Wednesday morning.

“If you look at what’s happened, the differential corrected — and over-corrected — very quickly and the unintended consequence of that is ... rail economics are severely damaged and a lot of the rail movements are stopping or have stopped,” Williams said.

“That’s going to have the opposite impact to what the government wants.”

The same charge was levelled last week by Imperial Oil Ltd. CEO Rich Kruger, who said his firm would cut crude-by-rail shipments from its Edmonton-area terminal to near zero this month.

The move is seen as a major setback for oil egress as Imperial shipped 168,000 barrels per day in December, an amount it said accounted for about half of Canada’s total rail exports.

On a conference call to discuss Suncor’s fourth-quarter results, Williams said the production cuts are also having a longer-term negative affect on investor confidence in Canada.

The criticism came as Suncor reported a $280-million net loss in the fourth quarter of 2018, in part due to the very price discounts the curtailments are designed to reduce. It added, however, that lower-priced feedstock resulted in better profit margins at its refineries.