Suncor delays maintenance project as COVID-19 cases plague Fort McMurray area

Suncor Energy Inc. is delaying a planned maintenance shutdown at its Base Plant oilsands mine upgrader in view of surging COVID-19 outbreaks that led to a state of emergency being declared last week for the Fort McMurray area of northern Alberta.

The delay of the maintenance "turnaround" for one of the upgrader's coker units will allow the company to avoid increasing the number of contractors in the region until similar work, now underway at the nearby Syncrude oilsands mine, is completed, Mark Little, the company's chief executive officer, said Tuesday.

"Currently, the third wave of the pandemic in Canada is significantly impacting the region of Fort McMurray," he said on a Tuesday conference call.

"Given this situation, and with Syncrude in the middle of turnaround schedule, we've delayed the start of our U2 turnaround at Base Plant until at least June ... This decision supports the completion of the Syncrude turnaround and minimizes the overlap between the two assets."

Suncor reported producing 519,900 barrels per day of upgraded synthetic crude in the first quarter, up from 503,600 bpd in the first quarter of 2020.

The increase was due in part to efficiencies from completion of a project to add pipeline connections between upgraders at its Base Plant and Syncrude (which is 58.74 per cent owned by Suncor), it said.

Suncor's total production was 785,900 barrels of oil equivalent per day, compared with 739,800 boe/d in the same quarter of 2020, as steam-driven production of bitumen from wells reached a record level of 170,700 barrels per day.

The Calgary-based oilsands producer and refiner says it had net earnings of $821 million in the first three months of 2021, including an after-tax restructuring charge of $126 million related to workforce reductions.

Suncor said recently it had reduced its employee count by about 600 in 2020 and would make more cuts this year. The company announced in October it would reduce total staff by 10 to 15 per cent, or as many as 1,930 jobs, over 18 months.

Workforce reductions

In an interview, Little said the most recent charge is actually for upcoming job reductions and the company expects to take another charge later this year.

"Some of the 10 to 15 per cent have already left the organization but this specific charge is for people who will be leaving," he said.

"We're well into it. We still have a ways to go and we won't actually finish this until we get into 2022."

Suncor's current round of workforce reductions are connected with its relocation of PetroCanada head office staff to Calgary from Ontario, a move announced in October that was expected to affect about 700 workers. Staff are being given an option to accept a voluntary separation, Little said.

In the first quarter of 2020, Suncor lost $3.5 billion, including $1.8 billion of non-cash after-tax asset impairment charges and a $1 billion unrealized after-tax foreign exchange loss on the revaluation of U.S. dollar denominated debt.