SUNCOR TOUTS ‘ STRANDED’ OILSANDS ASSETS IDEA.
Forget ‘no bitumen left behind’ policy
• The head of Suncor Energy Inc. suggests some of Alberta’s oilsands assets could effectively be “stranded” as a means to meet stringent new environmental regulations, signaling a shift away from the traditional perspective on how reservoirs are developed.
“We are advocating, in a modest way, to work with government so that we can strand some of the oil in the oilsands,” Suncor CEO Steve Williams said Thursday on a conference call with analysts to discuss the company’s second-quarter results.
The c omments c ome amid mounting pressure on oilsands producers to reduce their carbon footprints as tighter provincial and federal regulations are put in place to curb emissions.
In oi ls a nds development, stranded assets refer to assets that are left in the ground rather than produced due to their high emissions intensity or lack of competitiveness with other producers.
Williams’ view is a departure from some of his executive peers in Alberta’s oil and gas industry, which remains deeply divided over the fairness and effectiveness of recent environmental policies including an increase in levies on heavy emitters and a 100-megatonne cap on annual oilsands emissions.
Under t he provincial energy regulator, oilsands operators are currently expected to produce the entirety of their assets regardless of their respective emissions intensity — essentially a “no bitumen left behind” policy.
But by selecting only the lowest- emissions assets, a procedure known as “high grading,” Williams said Suncor’s oilsands operations could be between 10- and 20-per-cent more efficient.
That approach is a welcome change in perspective according to Simon Dyer, the associate regional director of Alberta for the Pembina Institute, who says massive oilsands reservoirs should ideally be viewed in more finite terms.
“It’s inconceivable that the entire oilsands can be developed under both the global commitments around greenhouse- gas reductions and Alberta’s obligations to reduce emissions under a 100- megatonne limit,” he said.
While oilsands companies naturally target the best reservoirs possible, Dyer said regulations could be altered to allow companies to be even more selective in the assets the develop.
In an email to the Financial Post, Suncor spokesperson Sneh Seetal cited the company’s efforts to use processes that leave more “heavy hydrocarbon chains in the ground,” to cut back on emissions both to extract and refine bitumen.
Williams has acknowledged in the past that his view on stranded assets is in part a self- serving one, considering Suncor’s massive reserves will likely allow the company to be more judicious about which reservoirs it develops compared to competitors.
“I actually support stranded assets; it helps me going forward,” he said during a business summit in London, England at the end of June.
“For practical purposes I have i n my ownership enough resource for the next 100 years, perhaps 200 years depending on what rate we take it out at. But I’m not like most oil companies.”
“Clearly there’s an enlightened self- interest aspect to this,” Dyer said. “I think if companies can preferentially access the highest- grade bitumen, they’re going to be more profitable.”
Last November, Williams was one of the few CEOs that stood alongside Rachel Notley as the Alberta government unveiled its new climate- change regulations. Others included Cenovus Energy Inc. CEO Brian Ferguson, Canadian Natural Resources Ltd. executive chairman Murray Edwards and Shell Canada president Lorraine Mitchelmore.
Suncor is meanwhile attempting to substantially reduce its per- barrel emissions.
The company this week published an annual report that gauges its environmental performance, in which it aims to keep its carbon emissions at current levels to the year 2030.
It said that a 30- per- cent cut in per- barrel emissions would keep its annual emissions at 21 megatons, compared to 27 megatons in the absence of planned emissions cuts.
The company provided no specific details around how it might meet the goal, saying on its website it was pursuing “a suite of research and development projects” worth roughly $ 200 million annually.
Currently Suncor is testing various technologies at its steam- driven operations, i ncluding processes that involve injecting solvents down wellbores along with steam to melt the bitumen in place using lower heating requirements.
Brian Ferguson, CEO of oilsands producer Cenovus Energy Inc., said his company isn’t following Suncor’s lead in seeking to strand any of its oilsands resource.
“I want to economically produce and environmentally produce as much of the resource that we have as we can.”
Ferguson added Cenovus is committed to reducing its greenhouse gas intensity by 50 per cent by 2026, but will do so while living up to its agreements with the province on resource recovery and royalty payments.
PRODUCE AS MUCH OF THE RESOURCE THAT WE HAVE AS WE CAN.