Oil Sands Truth: Shut Down the Tar Sands

Suncor boosts heavy oil sales to U.S.

This is a HUGE deal; as a result of the largest single tar sands operator expanding the amount of procesing done in the US, the number-- according to the FTA and NAFTA-- can NEVER GO BACK DOWN in terms of percentage, or "proportion".

This is where the "proportionality clause" kicks in; the amount of an energy source sent south in one day must stay at that proportion permanently.

Therefore this is the announcement that the state of Canada is now further beholden to the US state, never mind what happens to the indigenous nations as a direct result.


Suncor boosts heavy oil sales to U.S.
With upgrader plan on hold, company turns to American refiners

CALGARY — From Thursday's Globe and Mail
Jul. 23, 2009

With construction of its oil sands upgrader still stalled, Suncor Energy Inc. plans to sell unprocessed bitumen to refiners south of the border, where strong demand for Canadian heavy oil has sent prices soaring in recent months.

The timing of Suncor's planned expansion of its 200,000-barrel-a-day Voyageur upgrader, which was scheduled to be built by 2012 before being halted in January, is still uncertain. But work has already begun in preparation for resumption of another halted Suncor project, its 68,000-barrel-a-day Firebag 3 oil sands plant, which was half-built when workers were called away in January amid a dramatic move to slash capital spending.

Suncor has authorized contractors to finish building a camp and administration building, ahead of an expected green light for the project that is likely to come later this year.

That means the company intends to produce more bitumen than it is capable of upgrading, turning instead to U.S. refiners to do work it has traditionally done itself, chief executive officer Rick George said.

"We continue to see very good pull from customers in the U.S. refineries for heavy oil from Canada," Mr. George said. "So I expect that to be a fairly good strategy over the next four or five years."

Significant drops in heavy oil exports from Venezuela and Mexico have left U.S. refiners scrambling to fill their capacity, driving up the price for a commodity that used to trade at a 30-per-cent discount to light crude oil. In recent months, heavy oil has halved that gap, and on at least one day earlier this month was worth more than light crude - a development some observers have never before seen.

Strong heavy oil pricing damages the profitability of upgraders, and some analysts suggest the current situation may not change for years to come, a prospect that has dampened hopes of more upgrader construction in Alberta.

Upgraders take the thick, heavy oil sands bitumen and transform it into a product capable of being made into end products like gasoline - a form of value-added processing that adds long-term jobs.

Still, contractors and business leaders in Fort McMurray, Alta., have long expected Voyageur to resume construction in coming months. But Mr. George said Voyageur will not be restarted until the newly merged Suncor has a chance to evaluate where it fits in amongst the company's broad suite of projects. And with little more than a week remaining until the company closes its union with Petro-Canada, he remained coy on whether he intends to restart Voyageur soon - it will take at least three years to finish building it - or whether the project will be pushed back.

BMO Nesbitt Burns analyst Randy Ollenberger said Mr. George may be "making a straight bet that he's going to make more money as a bitumen producer and pushing [Voyageur] off.

"He seemed to be backing away from [Voyageur]," Mr. Ollenberger said. "I'd be very surprised if they don't complete it [at some point]. I think it's more a question of timing. And maybe it makes more sense for them to remain a bitumen producer for the next five or six years, so defer that capital until it makes more sense."

That prospect angers labour groups, who see the export of unprocessed bitumen as the export of provincial jobs.

"If a stalwart energy company like Suncor is thinking of heading south, then chances are that almost all other energy companies are having similar thoughts," said Alberta Federation of Labour president Gil McGowan. "And frankly, that's bad news for everyone who works in the energy sector."

Still, others believe Suncor could simply export bitumen from its expanding oil sands operations during the years it builds Voyageur - a prospect that would leave its original plans little changed.

"They'd still have to sanction [Voyageur] in short order to get it on stream in the next four-year time frame," said UBS Securities analyst Andrew Potter.


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