Page 4 - NorthAmOil Week 50 2021

NorthAmOil COMMENTARY NorthAmOil

Suncor, Cenovus to ramp

up spending in 2022

Oil sands producers Suncor Energy and Cenovus Energy anticipate

increases in capital spending and production in 2022

CANADA CANADIAN oil sands giants Suncor Energy which addresses planned maintenance and tail-
and Cenovus Energy have both said that they ings optimisations,” Suncor stated. “The remain-
WHAT: intend to raise their capital expenditure and ing 2022 capital programme is allocated towards
Suncor and Cenovus have production in 2022. the CAD2.1bn [$1.6] free funds flow growth ini-
both unveiled guidance The moves appear to be a bet that oil prices tiatives, including the base plant cogeneration
that shows higher will continue to recover from last year’s lows, to and Forty Mile power project, Terra Nova asset
spending and output in which they crashed following the onset of the life extension and in situ well pads.”
2022. coronavirus (COVID-19) pandemic. Prices The company anticipates producing 750,000-
have strengthened considerably since then and 790,0000 barrels of oil equivalent per day
WHY: West Texas Intermediate (WTI) is currently (boepd) in 2022, up by about 5% from its pro-
The companies are trading at around $70 per barrel. jected output in 2021 levels. The increase will be
betting on oil prices This relative oil price strength has been a supported by the ramp up of the Fort Hills oil
remaining comparatively boon to producers, including in the oil sands. sands mining project to full rates.
strong. While operators there are holding back from Fort Hills has been operating below capac-
the major investments required to develop new ity owing to slope stability issues on the south
WHAT NEXT: projects, they have been ramping up production side of the mine that were identified earlier this
Oil sands producers will from existing assets and oil sands output is close year. Suncor and its partners had taken one train
increasingly need to to record levels at 5mn barrels per day (bpd). at Fort Hills offline following the onset of the
balance future growth pandemic, returning it to service at the end of
with pursuit of their Suncor’s spending 2020 as demand picked up. However, the slope
decarbonisation goals. Suncor said this week that it anticipates spend- stability issues have prevented the train from
ing CAD4.7bn ($3.7bn) in 2022, up from fore- operating at full capacity. In July, Suncor cut
cast capex of CAD3.8-4.5bn ($3.0-3.5bn) this its 2021 production guidance for Fort Hills to
year. It added that its 2022 capex guidance was 45,000-55,000 bpd.
CAD300mn ($233mn) below its planned corpo- The company said this week that the improved
rate capital ceiling, which it attributed to efficien- outlook for Fort Hills’ performance in 2022 rep-
cies across its business. resents a two-train operation over the course of
“This capital programme is largely focused on the year, and an anticipated utilisation rate of
sustaining capital (CAD3.2-3.4bn [$2.5-2.6bn]) 90%. Suncor also expects Fort Hill’s operating

Suncor’s 2022
production growth will
be supported by the
Fort Hills mine returning
to full capacity.

P4 www. NEWSBASE .com Week 50 16•December•2021