CALGARY, Alberta (Reuters) – Canada’s Suncor Energy produced record volumes of synthetic crude oil in the first quarter, the company said on Thursday, as it sought to maximize high-value production to offset the impact of Alberta government curtailments.
The government of Alberta, Canada’s main crude-producing province and home to the oil sands, mandated temporary production cuts effective Jan. 1 to ease congestion on oil export pipelines and boost sagging crude prices.
While a number of integrated producers, including Suncor, have criticized the government intervention in the market, company profits improved this quarter after a rebound in prices as a result of curtailments.
Calgary-based Suncor reported operating earnings of C$1.2 billion ($891.73 million) on Wednesday.
Mark Little, who took over as chief executive from Steve Williams on Thursday, said on an earnings call that first-quarter oil sands production was down 11 percent from the prior quarter as a result of the curtailments.
Eighty percent of that first quarter production was light synthetic crude oil, as opposed to heavy crude, versus 65 percent in the final quarter of 2018, he added.
“Given the unusual environment we took a number of key decisions to improve the overall financial results of the company,” Little said. “We maximized production of our highest value oil sands products, namely synthetic crude oil and diesel.”
Suncor has upgraders that can process oil sands bitumen into refinery-ready synthetic crude, which trades at a higher price than lower-quality heavy crude.
Little said Suncor also transferred production quotas between different oil sands projects to maximize value. The company is one of the largest oil sands operators, with a number of thermal projects and bitumen mining operations, including a majority stake in the Syncrude project.
Little echoed recent comments by outgoing chief executive Williams in urging the Alberta government to end production curtailments and build new export pipelines.
“For investment to return to the province we must find a path forward for Albertans to get full value for all production in the province,” he said.
Reporting by Nia Williams; Editing by Steve Orlofsky