Suncor's plan to do more with less in 2018

Suncor's plan to do more with less in 2018

In this week's 2018 corporate guidance, Suncor Energy says it plans to spend $750 million less in capital next year but produce about 10% more oil.

The company has budgeted a capital spending program of about $4.5 to $5.0 billion in 2018, about one-quarter dedicated to upstream growth projects in the oil sands and its E&P division. Full year upstream production is forecasted to average between 740,000 and 780,000 boe/day, as both Hebron and Fort Hills are expected to come online.

Oil sands guidance

Suncor's Base Plant and SAGD operations are expected to produce 425,000 to 455,000 bbl/day next year, about 1% higher than 2017. Upgrader 1 is expected to undergo a five-year major maintenance turnaround sometime next year, bringing operating costs to a range of $23 to $26 per barrel, roughly unchanged from 2017 figures.

Syncrude's operating costs are expected to range between $32.50 and $35.50 per barrel of synthetic crude (SCO), about 25% lower than 2017 average costs. Syncrude's production guidance next year is 14% higher than 2017, expected to fall somewhere between 280,000 and 305,000 bbl/day of SCO. Suncor owns 53.74% of the Syncrude project.

Fort Hills is expected to produce its first barrel of oil by the end of this year, ramping up to 90% of nameplate capacity by the end of 2018, roughly 160,000 bbl/day. Operating costs are expected to average between $20 to $30 per barrel of bitumen by the fourth quarter. Suncor will operate Fort Hills on behalf of the Fort Hills Partners and owns a 50.8% stake in the mining facility.

Oil & gas price assumptions

Suncor's 2018 forecast assumes a US$55 price for West Texas Intermediate and US$40 for Western Canadian Select, relatively close to current prices. The company expects AECO gas prices to remain subdued in 2018, averaging about $2.50/GJ.


SOURCES:
SUNCOR ENERGY • 2018 CAPITAL PROGRAM AND PRODUCTION OUTLOOK • NOV 15, 2017
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