Interesting comments from SU
Suncor CEO:US Refinery Not A 'Must Have' Though Prices Lower
Last update: 4/24/2008 11:43:33 AM
OTTAWA (Dow Jones)--Suncor Energy Inc. (SU) still doesn't view another U.S. refinery as a "must have," though falling asset prices have made the option more interesting, Chief Executive Rick George said Thursday.
The Calgary-based company could even forego new refining capacity altogether, George added, selling the oil sands bitumen rather than an upgraded synthetic crude as it looks to push its output beyond half a million barrels a day.
"We're starting to see some assets come onto the marketplace ... (and the prices) are coming back into the range which is more interesting for us," George said on a conference call. "But (a U.S. refinery) is a 'nice to have' rather than a 'must have.'"
Suncor has consistently valued its oil sands resources above and beyond any downstream production, unlike several of its peers, which have bought refining assets or formed partnerships with U.S.-based refiners.
EnCana Corp. (ECA) and ConocoPhillips (COP) kicked off the cross-border trend in late 2006, swapping oil sands equity for a share in U.S. refineries, a model closely followed by Husky Energy Inc. (HUSKF) and BP PLC (BP) last December. Suncor has backed away from doing the same, while saying it won't rule out the option, and adding that it would prefer to buy a refinery when prices fall.
It already operates a 90,000-barrel-a-day refinery in Commerce City, Colo., as well as a smaller facility in Sarnia, Ontario.
Suncor has embarked on a C$20.6 billion expansion of its oil sands operations in northern Alberta, planning to raise output to 550,000 barrels a day in 2012 and overtake Syncrude Canada Ltd. as the country's biggest oil sands producer.
Analysts have speculated that Suncor may change its tune as the project ramps up to full capacity and the company has a better idea of what its downstream requirements are.
Bitumen trades at an often wide discount to benchmark light crude prices, as it is difficult and expensive to handle, requiring specialist refining equipment. Some producers are choosing to upgrade this into a light synthetic crude to narrow this discount or even fetch a premium.
But the sheer volume of Suncor's bitumen production would give it a different risk profile to smaller producers, and the company could "absolutely" be a pure bitumen producer and sell this to U.S. refiners, George said.
In any case, a refinery purchase isn't something Suncor has to rush into, he added.
"I don't think these asset values are going up anytime soon," he said.
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669; |
