Page 5 - NorthAmOil Week 06 2021

NorthAmOil COMMENTARY NorthAmOil

Both Suncor and
Cenovus have reported
charges related to the
cancelled Keystone XL
pipeline.

of the cross-border Keystone XL by new US bpd y/y and marking the second-best quarter of
President Joe Biden, which, it reported, was SCO production in Suncor’s history.
worth CAD100mn ($79mn). Cenovus, for its part, reported fourth-quar-
“The charge relates to a development cost ter production of 467,202 boepd in 2020, down
agreement signed with TC Energy in 2018 slightly y/y from 467,448 boepd and also down
to advance the [Keystone XL] project at such sequentially from 471,799 boepd in the third
time,” a Cenovus spokesman, Reg Curren, was quarter. However, the company’s oil sands pro-
quoted by the Canadian Press as saying in an duction expanded by 2% y/y to 380,693 bpd.
email. “Due to the revoked presidential per-
mit and suspension of the project, we accrued What next?
a CAD100mn expense in the fourth quarter The mention of Keystone XL illustrates that
related to those development costs ... We expect Canadian producers have other challenges to
this charge to cover the full amount of poten- contend with beyond oil price fluctuations.
tial costs associated with the agreements and it’s However, even with strengthening oil prices, the
considered a one-time expense.” impacts of the pandemic and the potential for
new lockdowns – with a resultant hit to energy
Production demand – are probably the most pressing issues
Despite the challenges being experienced by all at this point. Indeed, Imperial
three companies, their production rose in the The roll-out of COVID-19 vaccines has
fourth quarter, contributing to cautious opti- boosted hopes that the pandemic will soon be warned that the
mism over the trajectory of the gradual improve- beaten – or at least that its impact can be miti- demand impacts
ment in market conditions. gated to some extent. But this is not guaranteed,
Indeed, Imperial said it had achieved the with new strains of the virus causing uncertainty of the pandemic
highest quarterly output in 30 years during the over vaccine efficacy, given the gradual pace of
fourth quarter, averaging 460,000 barrels of oil the vaccine roll-out. could last well
equivalent per day (boepd) on a gross basis. Indeed, Imperial warned that the demand
This was driven by record production at the impacts of the pandemic could last well into into 2021.
company’s Kearl oil sands mine, which achieved 2021.
average gross production of 284,000 barrels per “Demand continues to be challenged by the
day, up by 40,000 bpd from a previous quarterly ongoing pandemic and we are seeing the impact
record. of community lockdowns in certain parts of
Suncor’s production was down slightly year Canada, particularly Ontario and Quebec,”
on year, at 769,200 boepd in the fourth quarter Imperial’s CEO, Brad Corson, said on his com-
of 2020, compared with 778,200 boepd in the pany’s earnings call. “Looking forward, there
same quarter of 2019. This was, however, an continues to be a high degree of uncertainty due
increase from 616,200 boepd in the third quar- to the various provincial and federal lockdowns,
ter of 2020. The company also achieved 514,300 as well as travel restrictions.”
bpd of synthetic crude oil (SCO) production A return to business as usual still seems some
in the fourth quarter of 2020, up from 456,300 way off, if it can happen at all.™

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