Page 5 - NorthAmOil Week 50 2021

NorthAmOil COMMENTARY NorthAmOil

Oil sands producers
increasingly have to
balance output growth
with decarbonisation.

costs to be cut by 40% next year compared to producers were predicted to ramp up spending
2021, when costs at the project rose owing to the and output, but while this is playing out, those
work required to stabilise the slope. increases have largely been modest and returns
Despite the challenges at Fort Hills, Suncor’s have continued to be prioritised.
output has also risen over the course of 2021, Cenovus also released its environmental,
and the ramp-up at Fort Hills, among other social and governance (ESG) report last week,
operations, will allow it to grow further still. in which it committed to a 35% reduction in
The company also said that it anticipates pro- absolute greenhouse gas (GHG) emissions by
duction at Syncrude rising by 5% year on year in the end of 2035 as it works to meet its 2050 tar-
2022, to 175,000-190,000 bpd. Suncor assumed get of net-zero emissions from operations over
operatorship of Syncrude in October 2021, and the longer term.
2022 will be the first full year of its operatorship
at the project. What next?
Oil sands producers are increasingly making
Cenovus’ plans stronger commitments to decarbonisation and
Cenovus, meanwhile, said it anticipates spend- any future growth will need to be balanced with
ing for 2022 to be CAD2.6-3.0bn ($2.0-2.3bn), this. In June, the five leading oil sands producers
up from an expected CAD2.3-2.7bn ($1.8- – Suncor, Cenovus, Imperial Oil, Canadian Nat-
2.1bn) this year. The company has earmarked ural Resources Ltd (CNRL) and MEG Energy –
CAD1.4-1.6bn ($1.1-1.2bn) of this for invest- formed an alliance dedicated to the long-term
ment in the oil sands, which it said was mainly pursuit of net-zero emissions.
related to additional sustaining capital invest- The five companies were joined by Cono-
ment directed towards assets where investment coPhillips in November, and now account for a
has been lower in recent years. combined 95% of oil sands output from facilities
In 2022, Cenovus expects to produce that they operate. However, other foreign com- The focus on
780,000-820,000 boepd, factoring in “major” panies with minority interests in the oil sands
planned turnarounds, up from a projected have held back from joining the alliance. returns has been
750,000-790,000 boepd in 2021. Oil sands Given that joining requires a commitment apparent for
production has been forecast to account for to invest the amount required to help bring
570,000-630,000 boepd of this, marking a y/y about decarbonisation of the oil sands, this some time, and
increase of 6% from this year’s projected output has prompted speculation that another exodus
of 540,000-596,000 boepd. of overseas players could be looming for the all the more so
Comments from Cenovus’ CEO, Alex Pour- region. If this plays out, the oil sands will end up
baix, illustrate what oil sands players – among even more overwhelmingly concentrated in the since the onset of
other North American producers – see as a pri- hands of Canadian companies. Given that these the pandemic.
ority currently. companies are already collaborating on the pur-
“Building on our upstream production suit of net zero, this may help boost co-opera-
strength in 2021 and the continued optimi- tion efforts in the oil sands.
sation of our business, I am confident in our At the same time, though, exits by inter-
ability to grow free funds flow and deliver sus- national producers will leave the region even
tainable, increased returns to our shareholders,” more dependent on domestic sources of capi-
Pourbaix said in his company’s December 8 tal. And this capital will not necessarily be easy
announcement. to come by as ESG increasingly takes centre
The focus on returns has been apparent for stage for investors and the oil sands continue
some time, and all the more so since the onset of to struggle with their image as a more polluting
the pandemic. As oil prices recovered this year, source of crude.™

Week 50 16•December•2021 www. NEWSBASE .com P5