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Suncor cuts $1.5 billion from budget to cope with low oil prices, virus impact

Last Updated Mar 24, 2020 at 10:06 am MDT

The Suncor Refinery in Edmonton is seen on Tuesday, April 29, 2014. Suncor Energy Inc. is cutting its 2020 capital spending budget by $1.5 billion or 26 per cent to a range between $3.9 billion and $4.5 billion.THE CANADIAN PRESS/Jason Franson

CALGARY — Suncor Energy Inc. is cutting its 2020 capital spending budget by $1.5 billion or 26 per cent to a range between $3.9 billion and $4.5 billion.

The Calgary-based producer and refiner is putting several projects on hold to deal with lower oil prices linked to a market share battle between Saudi Arabia and Russia, and lower demand for its retail fuel because of the COVID-19 pandemic.

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.

“The simultaneous supply and demand shocks are having a significant impact on the global oil industry,” said Suncor CEO said Mark Little in a statement late Monday.

“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.”

Suncor’s cuts follow reductions by other major oilsands players including Canadian Natural Resources Ltd., Cenovus Energy Inc. and Husky.

This report by The Canadian Press was first published March 24, 2020.

Companies in this story: (TSX:SU, TSX:CVE, TSX:CNQ, TSX:HSE)

The Canadian Press