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Suncor cuts capital budget by $1.5 billion as oilpatch spending continues to fall –



Suncor Energy says it is cutting its capital spending by 26 per cent this year, adding the company to the list of Canadian oil producers to slash their budgets in recent weeks. 

The move, announced late Monday, sees the Calgary-based company reduce its capital program in 2020 by $1.5 billion to a range between $3.9 billion and $4.5 billion.

Canada’s oil and gas sector is being hit with the fallout of plunging crude prices linked to a market share battle between Saudi Arabia and Russia, and lower demand because of the COVID-19 pandemic

“The simultaneous supply and demand shocks are having a significant impact on the global oil industry,” Suncor’s chief executive Mark Little said in a statement.

“We are adjusting our spending and operational plans to be prepared in the event the current business environment persists for an extended period of time.” 

Husky Energy, Cenovus Energy, MEG Energy and Seven Generations Energy are among the list of other companies to also announce spending reductions recently.

Suncor, a producer and refiner, is putting several projects on hold.

The shelved projects include a $1.4-billion plan announced in September to install two cogeneration units at its Oil Sands Base Plant in northern Alberta that would have reduced greenhouse gas emissions at the facility.

The company is also halting work on a $300-million wind power plant in southern Alberta approved in December.

On Sunday, Husky Energy Inc. announced it would suspend major construction work on the West White Rose Project off Newfoundland. Suncor has a 26 per cent interest in the project. 

Suncor says it will go ahead with construction of connecting pipelines between its Base Plant and nearby Syncrude oilsands operations and will complete the deployment of driverless haul trucks at its Fort Hills oilsands mine.

“Our business model and financial strategy are designed to withstand volatile environments,” Little said.

The plunge in prices has also had a severe impact on oil producers in the United States. On Tuesday, Chevron announced it slashed its 2020 capital spending plan by 20 per cent, or about $4 billion US.

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Saudi Arabia, Russia close in on record oil cut deal to end price war –



OPEC and it allies held talks on Thursday on record oil output curbs of 15 million to 20 million barrels per day (bpd), or 15 per cent to 20 per cent of global supplies, to support prices hammered by the coronavirus crisis, OPEC and Russian sources said.

They said the cuts included contributions of up to 5 million bpd from producers outside their group known as OPEC+ and could be made gradually, potentially overcoming resistance from the United States, whose involvement is seen as vital to win broad backing for an agreement.

Talks have been complicated by friction between OPEC leader Saudi Arabia and non-OPEC Russia, two of the world’s biggest oil producers. But OPEC sources and a senior Russian official said they had managed to overcome their differences.

Global fuel demand has plunged by as much as 30 million bpd, 30 per cent of global supplies, as measures to fight the coronavirus have grounded aircraft, reduced vehicle usage and curbed economic activity. So even a 20 million bpd cut falls short.

“That is a global deal,” one OPEC source said as the Organization of the Petroleum Exporting Countries, Russia and others which make up the OPEC+ group held a video conference.

Group wanted Canada, U.S. to contribute to cut: sources

Three OPEC+ sources said the group wanted non-members such as the United States, Canada, Norway and Brazil to contribute 5 million bpd to the overall cut, with OPEC+ would add at least another 10 million to 12 million bpd.

Alberta Premier Jason Kenney said the oil-rich province had not been asked to constrain energy output. 

He said his government had made it clear to OPEC that Alberta has been curtailing production for more than a year because of a lack of pipeline capacity. Production is falling even further due to low oil prices, he added.

I think that the main concern in OPEC+ is that North American producers not surge production to occupy the space created by their own curtailment should they do it,” Kenney told reporters.

He said he hoped reports that Russia and Saudi Arabia had reached an agreement on cuts are true.

Benchmark Brent oil prices hit an 18-year low last month and were trading on Thursday around $34 US a barrel, half their level at the end of 2019, dealing a severe blow to budgets of oil producing nations and high-cost U.S. shale oil industry.

U.S. President Donald Trump said last week a deal he had brokered with Saudi Arabia and Russia could lead to cuts of 10 million to 15 million bpd. Even that range, which was lower than the one cited by sources on Thursday, would be unprecedented.

The biggest one-off cut previously agreed by OPEC alone was 2.2 million bpd during the 2008 financial crisis.

U.S. President Donald Trump said last week he had brokered a deal with Saudi Arabia and Russia. (Alex Brandon/The Associated Press)

Thursday’s OPEC+ talks will be followed by a call on Friday between energy ministers from the Group of 20 (G20) major economies, hosted by Saudi Arabia.

U.S. involvement

OPEC sources have indicated that any deal on major cuts would require the participation of the United States, whose output has surged in recent years to exceed the production levels of both Saudi Arabia and Russia.

“We are expecting other producers outside the OPEC+ club to join the measures, which might happen tomorrow during G20,” the head of Russia’s wealth fund and one of Moscow’s top oil negotiators, Kirill Dmitriev, told Reuters.

The United States was invited to Thursday’s OPEC+ talks but it was not clear if it joined the video conference.

OPEC+, which started its video call at 14:25 GMT, said it was debating introducing cuts gradually for a period that would last at least two years — much longer than initially expected and possibly allowing the United States to join in.

Washington has previously said U.S. output was falling gradually because of lower prices, although Russia has previously said that was not the same as making cuts.

‘Managed to overcome differences’

However, it was not clear from what levels Moscow and Riyadh were proposing to agree cuts. Moscow had said reductions must be based on levels in the first quarter. Saudi Arabia has said the baseline should be from April, when its output jumped steeply.

“We have managed to overcome differences. It will be a very important deal. It will allow the oil market to start on a path to recovery,” said Dmitriev, who last month was the first official to propose a deal involving members other than OPEC+.

Goldman Sachs and UBS both said even major cuts might not be enough. “Ultimately, the size of the demand shock is simply too large for a co-ordinated supply cut,” Goldman said in a note.

In the United States, gasoline demand tumbled 48 per cent to 5.1 million bpd in a three-week period to April 3.

Eyeing Friday’s talks

Friday’s talks could see importing nations announce plans buy oil for their strategic reserves to boost demand, said Fatih Birol, the head of the International Energy Agency.

Several U.S. states could order private companies to limit production under rarely used powers. The oil regulator in Texas, the largest producer among U.S. states with output of about 5 million bpd, meets on April 14 to discuss possible curbs.

But Trump has not shown any appetite for U.S. cuts, instead he has said he had many options if Saudi Arabia and Russia failed to reduce supplies. U.S. senators called on the White House to impose sanctions on Riyadh, pull out U.S. troops from the kingdom and impose import tariffs on Saudi oil.

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Global Oil Producers Agree On Joint 10 Million Bpd Output Cut –



Global Oil Producers Agree On Joint 10 Million Bpd Output Cut |

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for, and a member of the Creative Professionals Networking Group.

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    OPEC has succeeded. On Thursday, the OPEC++ group agreed, in principle, to cut 10 million bpd in oil production, according to media. But will it be enough? Today’s oil prices suggest not.

    As oil inventories burst at the seams and threaten oil prices the world over, the oil markets have been riveted by the Organization of Petroleum Exporting Countries’ (OPEC) actions as it relates to potential production cuts. While many analysts doubted that the group, and various other states who agreed to sit down with OPEC to hash out a new market stabilization plan, would cut as much production as would be necessary to draw down inventories, the group’s actions have never been more crucial to the survival of the entire oil industry.

    So critical, in fact, that the industry is even seeing die-hard free-market cheerleaders rooting for a deal from the oil cartel.

    The global oil market first had OPEC, which tasked itself with balancing the market and controlling prices by manipulating supply. When OPEC’s influence waned as U.S. shale became a bigger and bigger oil-market adversary, OPEC added a few non-OPEC members, including Russia, to form OPEC+. With even more market clout stripped away from the group by the colossal demand destruction thanks to the coronavirus, OPEC has enlisted the help of even more oil-producing countries. This group has been referred to as OPEC++.

    The Terms of the Deal

    The group was thought by some to be discussing a 10 million bpd cut across its members. Other sources suggested the figure was 15 million bpd. Still other sources, as talks were taking place on Thursday morning, said the group was discussing a 20 million bpd cut.

    With global oil demand thought to have taken as much as a 30 million bpd hit, some thought even more barrels would be cut.

    In the end, the OPEC++ group agreed to cut just 10 million bpd. While still a massive production cut the likes of which the world has never seen, it is significantly under what the market will likely require in order to “balance”—and oil prices know it.

    Premium: What Will $15 Oil Mean For Producers?

    As part of the deal, all the specifics of which have not yet been released, Russia has reportedly agreed to 2 million bpd of cuts. Saudi Arabia, meanwhile, has agreed to shave 4 million bpd off its record-setting April production levels of 12.3 million bpd – for a cap of 8.3 million bpd. 

    The rest of the members have not yet worked out who will cut what.

    There will be additional G20 discussions about the production cuts on Friday.

    The hiccup in the deal had been the rivalry between Saudi Arabia and Russia, and whether the United States would succumb to the international pressures mounted against it to join in the cuts. US President Donald Trump, however, has repeatedly said that the market would naturally force US production down, effectively “cutting” along with OPEC as a matter of course. This issue, too, is expected to come up at Friday’s meeting.


    OPEC + has had a pretty good track record overall when it comes to complying with its production quotas. Prior to the end of the previous production cut deal than expired on April 1, the extended OPEC group reached 112% compliance. Still, many individual OPEC member countries have had a difficult time staying in compliance with production cut quotas throughout the last few years, with some flagged as chronic overproducers. Also, that 112% compliance figure is skewed, with OPEC over complying and the “+” part of the OPEC+ group under complying. In January this year, OPEC’s allies in the production cuts achieved only 55% of their targeted cuts. Meanwhile, OPEC achieved 136% of its promised cuts.

    The figures suggest that OPEC was more motivated to take action to stabilize the market than its OPEC+ counterparts.

    While Saudi Arabia has a great track record for keeping within its quota – or even substantially below it – Russia and Iraq, for example, were chronic overproducers. This has led to much skepticism that the new group, comprised of more than just the traditional members, will be able to stay within the agreed-upon levels.

    To ensure compliance, a draft communique sent to G20 member countries – circulated prior to the Thursday OPEC++ meeting – told members that it would create a special group to monitor this compliance. The group would not only monitor the compliance to the Thursday agreements, but it would also report back to the G20 energy ministers “for further corrective actions if needed,” according to Bloomberg, who saw the draft.

    The draft document didn’t specifically mention “production cuts”. Rather, the document indicated that it would monitor whatever steps the Thursday group agreed on that would stabilize the oil markets.

    With 10 million bpd in the bag, the market will now look to the G-20 meeting to see how the United States will respond to the agreement that OPEC has hashed. In the meantime, oil prices have responded with a lukewarm reception.

    By Julianne Geiger for

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      Calgary’s unemployment rate is highest in Canada as Alberta’s jobless rate spikes – Global News



      Calgary’s unemployment rate is now the highest in the country as residents deal with the fallout of the COVID-19 pandemic.

      New numbers released by Statistics Canada on Thursday show the jobless rate in the southern Alberta city sat at 8.6 per cent in March, a sharp increase from 7.4 per cent February and the worst among the 33 metropolitan areas surveyed.

      READ MORE:
      Coronavirus: Canada lost 1 million jobs in March

      In Edmonton, the unemployment rate increased ever-so-slightly in March to 7.9 per cent compared with 7.8 per cent the month before.

      According to Statistics Canada, unemployment rose in all provinces, with Alberta seeing unemployment spike to 8.7 per cent in March, up from 7.2 per cent the month before.

      [ Sign up for our Health IQ newsletter for the latest coronavirus updates ]

      Alberta’s jobless rate is one of the highest in Canada. Only New Brunswick (8.8 per cent), Nova Scotia (9.0 per cent), and Newfoundland and Labrador (11.7 per cent) have higher provincial numbers.

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      Some Calgary businesses hiring during economic slowdown

      Some Calgary businesses hiring during economic slowdown

      Nationally, the unemployment rate jumped to 7.8 per cent from 5.6 per cent in February, the largest one-month increase since comparable record-keeping began in 1976. The previous record was the 125,000 jobs lost in January 2009.

      Canada’s March labour market report was the first since the country started feeling a significant impact from the coronavirus pandemic.

      READ MORE:
      1 month after Alberta’s first COVID-19 case, what’s changed?

      Alberta’s first case of COVID-19, a woman in her 50s from the Calgary area, was announced on March 5.

      Two weeks later, on March 19, Alberta’s chief medical officer of health Dr. Deena Hinshaw announced the province had recorded its first COVID-19 death.

      READ MORE:
      Alberta Health Services, grocery stores, delivery companies among those looking to hire

      In the month since the province’s first COVID-19 case was announced, schools across the province have been closed, communities have declared local states of emergency and non-essential businesses have been ordered to shut down.

      © 2020 Global News, a division of Corus Entertainment Inc.

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