Sunoco considering returning to the oilsands
By CAROL CHRISTIAN
Today staff
After more than a decade-long absence, Sunoco Inc. is looking to return to the Alberta oilsands by way of increased bitumen for its U.S. refineries.
Sunoco president Lynn Elsenhan outlined that business intention Monday during an analyst conference call. However, she didn’t offer any specific companies as potential partners for the Northern Alberta venture.
The company has started looking, however, and is looking long-term, according to company spokesman Thomas Golembeski.
The plan is to rework its Toledo, Ohio, refinery to process more Alberta bitumen.
With it possibly taking up to five years, it requires Sunoco finding a partner “that shares our vision” to signing a deal financially satisfying to both parties.
The company is looking again at the oilsands because, as Golembeski stressed, it offers a secure, close to home supply.
“It is another source of energy from a friendly place that could provide a reliable supply,” he added.
Sunoco left the oilsands in the 1990s, breaking away from its original company, Sun Oil. It was that company that launched the Great Canadian Oilsands, the predecessor to Suncor Energy. Meanwhile, Sun Oil rebranded to the American Sunoco Inc., which has no ties to Sunoco in Canada. That Canadian company, however, is affiliated with Suncor.
“Our feeling is that the fundamentals for the supply/demand balance of refined products in this industry is going to be challenging and volatile, and most particularly for gasoline, but in 2009, with a weakening economy, pretty much on a global front,” said Elsenhan of the market outlook. During the conference call, she also predicted weaker margins on the distillate side.
“Going into 2009, we are preparing ourselves for what we believe to be a pretty challenging time in the refining and marketing part of our business.”
Even so, she said Sunoco has excellent non-refining earnings and operating cash flows in the non-refining parts of the business which is expected to provide some stability during the refining downturn.
Despite the bleak outlook, Elsenhan noted there will be pockets of opportunity for profitability, something her company has a reputation for finding.
She added the Toledo location is particularly well located for future expansion — an opportunity to partner with a Canadian oilsands producer.
“I recognize that right now you might say, ‘well, you know, Canadian oilsands are not looking that prosperous at (these) current oil prices,’ but you have to recognize these kinds of projects including setting up these kinds of deals, takes time,” explained Elsenhan. “We are actively pursuing this kind of opportunity now with the intent that it would come on more in the medium term, and put that as a priority before the kinds of opportunities we’d see in the northeast.”
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