Oil cuts pose safety and operations risk, says Suncor Energy

CALGARY Forced Alberta government crude oil production cuts next year will result in “unintended consequences” that could include increased safety hazards for its employees, Suncor Energy Inc. warned Friday.

Despite the cuts that begin Jan. 1, Canada’s largest integrated oil and gas company forecasts production will grow by 10 per cent in 2019 on a stand-pat budget of between $4.9 billion and $5.6 billion.

Integrated companies like Suncor, Imperial Oil Ltd. and Husky Energy Inc. are opposed to the curtailments which are supported by bitumen producers like Cenovus Energy Inc.

The cuts announced by Premier Rachel Notley earlier this month are intended to bring industry output in line with pipeline capacity to drain trapped oil from the western Canadian market and reduce resulting steep discounts for crude oil.

“In the short term, the government of Alberta action has resulted in winners and losers in the market, shutting in valuable upgrading throughput and has made transporting crude oil out of the province by rail uneconomic,” Calgary-based Suncor said in a news release.

It added it is co-operating with the government and Alberta Energy Regulator and “working hard” to minimize associated contractor layoffs.

The province said it will order the suspension of 325,000 barrels per day or about 8.7 per cent of overall oil production for about the first three months of 2019 before reducing the cuts for the rest of the year. The cuts only affect producers with more than 10,000 bpd of output, limiting curtailments to about 25 companies, mainly in the oilsands.

Suncor said it will suffer from a “disproportionate allocation” of production cuts, adding it assumes the curtailments are in place for three months before falling to 30 per cent of initial levels for the remainder of 2019.

Throttling back production during the coldest months of the year — when it typically operates full out without stopping for maintenance — could increase risks to safety and reliability, the company warned.

“Suncor will not put the safety of our employees and contractors at risk,” it stated.