Suncor’s $5.5 Billion Deal May Spell End of Base Plant Project

But last year, Canadian Environment Minister Steven Guilbeault signaled he may not approve the project, saying its emissions “may not align” with Canada’s climate targets.

While Suncor would probably prefer that Canada approve its mine life extension, the risks of cost overruns and labor shortfalls mean the company probably won’t proceed with the project, Phil Skolnick, an analyst at Eight Capital, said by phone. “That’s basically what they are implying,” he said. “It would be a very costly effort if they got approval for” the mine life extension.

The TotalEnergies deal is a “major step in securing long-term bitumen supply to our Base Plant upgraders at a competitive supply cost,” Chief Executive Officer Rich Kruger said in a release.

Suncor and other Canadian oil sands producers have shifted focus in recent years from growing production to trying to cut emissions, as the government has increased its carbon tax and may decide to place a cap on emissions in the future. The industry has rolled out a plan that will cost tens of billions of dollars to deploy carbon capture and storage facilities in the next decade, in an effort to cut emissions to zero by 2050.

Suncor will continue with its regulatory application for the Base Plant mine, which remains an option for supplying its upgraders, Suncor spokeswoman Sneh Seetal said by phone.