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Suncor CEO sees Alberta oil cuts ending early

Bloomberg logoBloomberg 2019-02-11 Kevin Orland
a group of people looking at a phone: Steve Williams, president and chief executive officer of Suncor Energy Inc., speaks to members of the media during a grand opening event for the Suncor Fort Hills oil-sands extraction site near Fort McKay, Alberta, Canada.© Bloomberg Steve Williams, president and chief executive officer of Suncor Energy Inc., speaks to members of the media during a grand opening event for the Suncor Fort Hills oil-sands extraction site near Fort McKay, Alberta, Canada.

(Bloomberg) -- Suncor Energy Inc. Chief Executive Officer Steve Williams said he expects Alberta’s mandated oil-production cuts to end earlier than planned after the program boosted heavy crude prices so much that it made purchases unprofitable for U.S. refiners.

Alberta’s curtailment program -- intended to clear space on the province’s limited pipelines and draw down a glut of oil that had built up in storage -- has meant it’s now uneconomic for U.S. refiners to buy crude from Alberta and foot the bill to move it via rail, he said.

“The rail economics are seriously damaged, and a lot of the rail movements are stopping or have stopped,” Williams said Wednesday on Suncor’s earnings conference call with analysts. “That’s going to have the opposite impact to what the government wants.”

Alberta has already reduced the curtailment by 75,000 barrels a day, and Williams said it’s time to start planning for a “soft exit” from the strategy to avoid more unintended consequences.

Suncor’s Fourth-Quarter Earnings Dented by Canadian Crude Slump

To contact the reporter on this story: Kevin Orland in Calgary at korland@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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