JOHANNESBURG (miningweekly.com) – Calgary-based energy company Suncor's total upstream production in the second quarter decreased to 330 700 barrels of oil equivalent per day (boe/d), compared with 559 900 boe/d in the first quarter of the year, mostly owing to the production shutdown at the company’s Oil Sands and Syncrude operations, which were affected by the forest fires in the Fort McMurray region.
The company noted, however, that its quarterly production decrease was partially offset by a higher working interest in Syncrude and increased production from the company’s exploration and production (E&P) business.
Impacted on by the wildfires, production from Suncor’s oil sands operations decreased to 177 500 bbls/d in the second quarter compared with 423 800 bbls/d in the comparable quarter of 2015.
This was also partly due to the completion of a turnaround at Suncor’s Upgrader 2 facilities, the first completed since the company moved to a five-year turnaround cycle. By mid-July, production at all Suncor’s oil sands operations had returned to normal.
"The forest fires in the Fort McMurray area significantly impacted the region. We shut in our oil sands production and focused on the safe evacuation of employees, their families and the community. I'm tremendously proud of the Suncor team. Their resilience and professionalism was readily apparent throughout our response and ensured our assets safely returned to service,” said CEO Steve Williams in a statement.
Cash operating costs a barrel for Suncor’s oil sands operations increased in the second quarter to $46.80/bl, compared with $28.00/bl achieved in the second quarter of 2015.
However, despite the impact of the forest fires, the cash operating costs of the oil sands operations are expected to be within the full-year guidance range of $27/bl to $30/bl.
Meanwhile, Suncor's share of production at the Syncrude facility increased to 35 600 bbls/d in the second quarter, compared with its 2015 second-quarter production of 24 900 bbls/d. The company attributed this increase to its acquisition of Canadian Oil Sands Limited in the first quarter and that of Murphy's 5% Syncrude ownership interest in the second quarter.
Production volumes in E&P increased to 117 600 boe/d in the second quarter, compared with 111 200 boe/d in the prior year’s comparable quarter, primarily owing to increased production from new wells at Hibernia, and Golden Eagle operating at peak rates after being in the ramp-up phase in the second quarter of 2015. This was partially offset by natural production declines at Terra Nova.
"Solid results from our downstream business and reliable production from our E&P assets allowed us to generate positive cash flow in the quarter, helping to offset the impact of the forest fires and, once again, demonstrating the value of our integrated model," said Williams.
Suncor recorded a second-quarter operating loss of $565-million and cash flow from operations of $916-million, compared with operating earnings of $906-million and cash flow from operations of $2.15-billion in the prior year’s comparable quarter.