Suncor Energy, Canada’s second-largest oil producer, will focus this year on cutting operating costs in its oil sands mining business, CEO Rich Kruger said on Thursday, as the company continues efforts to fix long-running underperformance.
Calgary-based Suncor is trying to improve safety and efficiency after a string of fatalities at oil sands sites in recent years and slope stability issues at its Fort Hills mine in northern Alberta.
The company’s bitumen mines produced more than 600,000 barrels per day (bpd) in 2023, which were upgraded into synthetic crude and account for the bulk of Suncor’s total 746,000 bpd production.
But operating costs at its oil sands plants, including Fort Hills and the Syncrude project, range from $28-$38 a barrel, compared with around $22 a barrel at rival Canadian Natural Resources’ mining and upgrading operations.
“We know exactly what our unit cost competitive gap is relative to best in class,” Kruger said on a call to discuss Suncor results. “Fundamentally as a company we will improve our cost performance as our mining business improves its performance.”
Moving ore around is the single highest cost component of bitumen production, Kruger said. To tackle that, Suncor is buying larger haul trucks and ramping up autonomous operations.
The company will double its autonomous haul truck fleet to 91 vehicles this year so that all ore at Base Plant will be moved autonomously, Kruger said, adding each conversion saves about C$1 million ($741,455) per truck per year.
Suncor Base Plant and Syncrude have been operating for decades and are the oldest mines in the oil sands. Part of the cost underperformance was due to the age and configurations of those assets, the CEO said.
“We’re also evaluating alternatives to address our structural gap via alternate mining scenarios or different technologies in our mines,” he added.
Former Exxon Mobil executive Kruger became CEO last year, replacing Mark Little, who resigned in mid-2022 following the death of a worker on a Suncor site.
Little’s departure came after activist investment firm Elliott Management built a stake in the company and demanded changes including a board revamp.
On Wednesday, Suncor said Russ Girling, who joined the board in 2021 after stepping down as CEO of pipeline company TC Energy, had been appointed chair.
Suncor on Wednesday reported fourth-quarter earnings that beat analysts’ expectations, helped by higher production. Its shares were flat at C$45.36 on the Toronto Stock Exchange on Thursday.
(Reporting by Nia Williams in British Columbia; Editing by Bill Berkrot)