Suncor is Seeking a “unique” Benefit from the Trans Mountain Pipeline

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Suncor Energy Inc. says it will rely on its trading platform to eliminate middlemen and deal directly with new customers to gain a “unique” advantage once it begins shipping to more regions through Canada’s now-operating Trans -Mountain pipeline expansion begins.

The Alberta-based company, which reported first-quarter net income of $1.6 billion including an all-time high in oil sands production, said the launch of Trans Mountain Corp.’s new pipeline. on May 1 would increase oil production profits, but this could be partially offset by higher refining costs.

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“What perhaps makes us a little unique is that we don’t rely on third-party trading,” said Dave Oldreive, executive vice president downstream at Suncor. “This allows us to capture the full value of the transaction by transacting directly with customers.”

He added that the company has leased ships in the Pacific Ocean, which will give it an advantage on transportation costs.

The new 1,150-kilometer pipeline is part of an expansion project connecting an existing line dating to 1953 that connects Alberta and British Columbia. Together, the two pipelines are expected to deliver around 890,000 barrels of oil per day.

Due to factors such as transportation costs, limited market access and differences in quality, Canada’s heavy crude oil trades at a discounted price compared to light crude oil from the United States. Analysts and industry insiders expect the Trans Mountain pipeline to narrow the price gap by making transportation cheaper and opening new markets.

Oldreive said he expects crude oil in the pipeline to reach markets in California and Asia. He added that Suncor’s trading offices were working to “strengthen relationships” with those markets so the company could negotiate directly with customers and get better deals.

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“I think it gives us a little bit of a competitive advantage,” he said. “In fact, in the first quarter we shipped diesel from the East Coast to Scandinavia, achieving unique quality differences in this market. We were also able to record differences in quality from the West Coast to Latin America.”

Other oil producers have also said they expect the pipeline to improve conditions for Canadian companies.

Cenovus Energy Inc. said May 1 that the company is eyeing a “pretty large market,” adding that Canada needs to build more infrastructure to address declining productivity.

Canadian Natural Resources Ltd. said May 2 that the new pipeline creates additional export opportunities on the West Coast, and Meg Energy Corp. expects Canada’s oil producers to enjoy better prices “for years to come.”

Suncor reported first-quarter earnings of $1.25 per common share, compared with $1.54 in the year-ago quarter. On an adjusted basis, operating profits in the first quarter were $1.82 billion, up from $1.81 billion in the same quarter last year.

The company also reported an all-time high oil sands production of 785,000 barrels per day and the highest ever refinery throughput of 455,000 barrels per day.

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Suncor held its annual meeting on Tuesday, where shareholders were asked to vote on two resolutions, neither of which passed.

The first resolution called for Suncor to abandon its promise to become a net-zero emitter by 2050, which was rejected by 98.92 percent of stocks represented in the vote. That proposal was submitted by InvestNow Inc., which said the target would be costly and could have a negative impact on the company.

The second resolution called on Suncor to provide further details on its climate transition. This was rejected by 88.45 percent of the shares. This was filed by the Salal Foundation, a nonprofit that sought to hold Suncor more accountable for its emissions.

The results of both votes were consistent with Suncor’s recommendations.

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