Border tax unlikely, says Suncor CEO
CALGARY — The head of the largest energy company in the country is discounting the likelihood that the United States, Canada’s largest market for oil and gas, will bring in a border adjustment tax as suggested by some Republican lawmakers.
Steve Williams, chief executive of oilsands giant Suncor Energy, said Thursday he sees more positives than negatives with U.S. President Donald Trump, adding that promised corporate tax reductions in the United States could benefit Suncor’s businesses there.
“My view is that, overall, Canada is not at the top of the list for the U.S. for their trade concerns,” Williams said on a conference call with analysts to discuss fourthquarter financial results.
“I think it’s a very healthy balance and a very healthy symbiotic relationship between Canada and the U.S., so I think the probability of a border tax is very low,” he added.
He said the appointment of former ExxonMobil CEO Rex Tillerson as U.S. secretary of state is encouraging as he is familiar with the oilsands industry and recognizes that Canadian oil and gas are vital to the American economy.
Williams’ view runs counter to some who worry about the damage a border adjustment tax could inflict on Canada’s energy industry.
TD Securities energy analyst Menno Hulshof said in a report Thursday he estimates Canadian oil and gas producers have lost about $10 billion in stock value because of investors’ border tax concerns that began to take hold in mid-December.
In its quarterly results released late Wednesday, Suncor announced an increase of $1.4 billion to $1.9 billion in the estimated cost of its Fort Hills oilsands mining project, blaming it on delays caused by the wildfires in Fort McMurray, Alta., last spring and on construction adjustments to add production capacity.
Fort Hills is now expected to cost $16.5 billion to $17 billion, up from the previous estimate of $15.1 billion. The project, which is expected to produce first oil in late 2017, is owned 50.8 per cent by Suncor, 29.2 per cent by Total SA and 20 per cent by Teck Resources.
On the call, Williams said he doesn’t think any energy companies — Suncor or its rivals — will invest in oilsands mining for “in excess of 10 years” due to high costs and low oil prices.
“When we look at the absolute economics of Fort Hills, those are not projects we will be repeating in the foreseeable future,” he said.
Other mines have also run over budget. Phase 1 of Imperial Oil’s Kearl oilsands mine, which opened four years ago, cost $12.9 billion to build, up from an initial budget of $7.9 billion, due to changes in scope and delays in bringing production modules from South Korea.
Suncor, Canada’s largest oil and gas company by market capitalization, reported stronger-thanexpected net earnings of $531 million, or 32 cents per share, in the fourth quarter of 2016 on higher oil prices. That’s a turnaround from a net loss of $2 billion, or $1.38 per share, in the same period of ’15.