Suncor cuts its workforce by 20% to improve safety and efficiency

Suncor Energy Inc. is reducing its contractor workforce by 20% as part of its efforts to improve the safety and performance of its oil sands operations.

Acting CEO Kris Smith told analysts on a conference call on Thursday that more than half of the workforce reductions have already been completed, with the rest on track to be completed by the first half of 2023. .

He said the decision to reduce the number of contractors working at Suncor sites was the result of “a thorough review of the composition of our frontline workforce” and was intended to reduce the number of hours of exposure that put the company at risk of injury on the job. or fatal accidents, as well as improving efficiency and competitiveness.

“My priority has been to remove distraction from the organization and focus our people on safe and reliable operations in our greatest opportunities,” Smith said on the call.

Suncor’s safety record has come under scrutiny in 2022, since US activist investor Elliot Investment Management publicly called for changes at the Calgary-based energy company.

Since 2014, there have been at least 12 fatalities at Suncor’s oil sands facilities in northern Alberta, including five since 2021. That’s more than all of its industry peers combined.

Smith took over as CEO in July to replace Mark Little, who resigned from his top job a day after a 26-year-old contractor was struck by equipment and killed at Suncor Base Mine.

He said Suncor is also improving its contractor management processes and partnering with experts to ensure managers across all departments and operations receive the latest safety training and education.

The company is also installing collision avoidance technology on more than 1,000 pieces of mobile mining equipment to eliminate what it calls a “key risk” within its operations. Fatigue management systems will also be completed at all Suncor mines by early 2023, Smith said.

On Wednesday evening, Suncor reported a net loss of $609 million in the third quarter, the result of a $3.4 billion writedown on its share of the Fort Hills oil sands mine.

The net loss, which equated to 45 cents per common share, contrasts with a profit of $877 million, or 59 cents per common share, in the year-ago quarter.

Suncor buys Teck’s stake in Fort Hills

Suncor announced last week that it will buy out Teck Resources Ltd.’s 21.3% stake. in the Fort Hills oil sands project for about $1 billion. The agreed sale price reflects a lower market value for the mine, resulting in a non-cash impairment charge.

On an adjusted basis, however, Suncor said it earned $2.6 billion for the three months ended Sept. 30, or $1.88 per share, more than double the $1 billion or 71 cents per common share than it gained on an adjusted basis in the same three months. of 2021, thanks to significantly higher crude oil prices and upstream production.

Suncor’s total upstream production increased to 724,100 barrels of oil equivalent per day (boe/d) in the third quarter of 2022, compared to 698,600 boe/d in the prior year quarter. Refinery crude throughput was 466,600 barrels per day and refinery utilization was 100% in the third quarter of 2022, compared to 460,300 barrels per day and 99% in the third quarter of 2021.

Suncor announced that it will host an investor presentation on Nov. 29 to provide additional information on its safety and performance improvement plans, as well as the results of its review of the potential sale of its sales division to detail.

Suncor, which recently sold its wind and solar assets as well as its exploration and production assets in Norway, is trying to rationalize its portfolio to focus on its “core business”.

Eight Capital analyst Phil Skolnick said this could mean Suncor is about to embark on an oil sands “buying spree”. He said that following the agreement to acquire Teck’s share of Fort Hills, he would not be surprised if Suncor was also in negotiations with French company TotalEnergies SE for its remaining 24.6% stake. in the Fort Hills project.

“We could also see (Suncor) seek to acquire CNOOC and Sinopec’s combined 16.2% stake in Syncrude (it has been reported that China is considering exiting Canada),” Skolnick said in a research note.

Michael A. Bynum