‘We believe in free trade’: Suncor CEO on tariff threat

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The head of Suncor Energy Inc. says the oilsands giant’s Canadian refineries could help shield it from United States President Donald Trump‘s threatened tariffs in comments that underscored the uncertainty currently gripping the sector.

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“I don’t know that anyone on the planet knows exactly what’s going to happen on tariffs,” chief executive Rich Kruger said on an earnings conference call on Thursday. “We believe in free trade. We think the U.S. needs us; we need the U.S. But if we were in a world of tariffs, I like our position relative to our peer group.”

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Trump has threatened Canada with import tariffs of 25 per cent on most goods brought into the U.S. and 10 per cent on energy, including crude oil, natural gas and refined petroleum products. But on Tuesday, he delayed implementing the levies and gave Ottawa 30 days to respond to concerns that he’s raised over drugs and illegal immigration at the border.

Kruger said Calgary-based Suncor is well-positioned to weather a trade war as a result of its Canadian refining footprint, which is in Edmonton, Montreal and Sarnia, Ont. It also has a refinery in Colorado.

“Probably (about) 60 to 65 per cent of our barrels stay north of the border, and they either go through our refining network (to) other refineries of customers or off the coast,” he said. “That’s a high fraction. We have a large Canadian refining footprint.”

Canada, however, has limited refining capacity overall, with the vast majority of crude production from Western Canada being sent by pipeline or rail south to refineries in the Midwest and the Gulf Coast.

Suncor is also a committed shipper on the expanded Trans Mountain pipeline (TMX), which carries crude from Alberta to the British Columbia coast and is currently the only export pipeline linking the Western Canada basin to markets other than the U.S.

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A spokesperson for TMX earlier this week said it expects there will be increased interest in shipping on the pipeline due to the uncertainty surrounding a potential trade war, though it was too early to predict what the volumes would be.

TMX is looking to increase the volume of shipments from its Westridge Marine Terminal, Suncor executives said on Thursday, and implement new lighting to soon allow ships to dock or load at night. Dredging under the Second Narrows Bridge in the future could also enable larger cargoes to be sent through the Burrard Inlet.

Suncor posted adjusted earnings of $1.57 billion in the fourth quarter, down from $1.64 billion during the same period in 2023, which the company attributed to a decrease in profit from refined fuel sales and higher royalty costs, partially offset by higher sales volumes.

However, it beat analyst expectations due to better-than-expected cash generation and lower capital spending.

Suncor had record upstream production of 875,000 barrels per day (bbl/d) in the fourth quarter, compared to 808,100 in the same period last year, partly due to its increased working interest in the Fort Hills oilsands mine — it now owns 100 per cent of the mine after acquiring TotalEnergies SE’s stake last year — as well as record production from its in-situ Firebag facility. 

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The company set a new refined product sales record of 613,000 bbl/d during the fourth quarter, exceeding the record set in the previous quarter.

Suncor said it had also executed a plan to deliver all its mined ore transported to its Base Plant for crushing and processing by autonomous trucks. The company had set a goal of converting 91 trucks to autonomous operation by the end of 2024, a move it said was already boosting productivity.

“(That) now sets Base Plant, Millennium Mine and North Steepbank as the single-largest deployment of autonomous trucks anywhere in the world,” Peter Zebedee, Suncor’s executive vice-president in charge of oilsands, said.

Suncor ended the year with a net debt of $6.86 billion (excluding leases), coming in below analyst estimates. The company previously committed to paying out 100 per cent of excess funds to shareholders through share buybacks after reaching its $8 billion net debt target last quarter.

The company’s adjusted funds from operations per share came in six per cent above what most analysts were anticipating, according to RBC Capital Markets. It also spent about $1.5 billion during the quarter, which was nine per cent lower than RBC had forecast.

“Suncor Energy’s robust fourth-quarter results cap off an exceptional year and reinforce our bullish medium- and long-term outlook,” analyst Greg Pardy said in a note.

• Email: mpotkins@postmedia.com

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