Suncor Energy will bring six new thermal SAGD projects online in the early to mid-2030s to replace production from its Base Mine, the company said during an investor day Tuesday in Toronto. The mine, which is on pace to be fully depleted by 2035, provided nearly one-quarter of Suncor’s corporatewide production of 860 Mb/d after upgrading last year.
The new projects will have a combined capacity of 320 Mb/d, which would offset expected declines from mined bitumen (see right chart below). At Firebag, where production averaged 245 Mb/d of bitumen last year, Suncor plans to build four additional 60-Mb/d phases at a cost of C$35,000 to C$40,000 per b/d of capacity. At the nearby undeveloped Lewis lease area, Suncor plans to build two-40 Mb/d phases at a cost of C$25,000 to C$30,000 per b/d. The cost intensity for the projects at Lewis is less than for Firebag, as Suncor plans to use excess steam produced at its Base Plant to feed the project, while new steam generation capacity will be built at Firebag. Suncor has regulatory approvals in hand for up to 160 Mb/d at Lewis, while for Firebag it recently applied to expand the approved capacity from 368 Mb/d to 700 Mb/d. Receiving the approvals for Firebag will be key to the viability of this plan. Beyond these six projects, Suncor has plenty of additional resources that could see development in future years.
Recall that in 2020 Suncor filed an application to build a new 225-Mb/d mine, west of its Base Mine, but that project appears to have remained in regulatory limbo at the federal level for various reasons, while building and operating SAGD production capacity can typically be done for less than half the cost of building and operating a new mine.
To fund these projects, Suncor expects capital expenditures to be around C$6 billion annually between now and the mid-2030s (see left chart below), which would be similar to levels seen in recent years.
Additionally, Suncor provided guidance for 100 Mb/d of production growth by 2028 (30 Mb/d from Firebag, 45 Mb/d from mining, and the remainder from offshore Newfoundland’s West White Rose project), a further $5/bbl reduction to its targeted corporatewide breakeven WTI price (now targeting to be able to fund sustaining capital and dividends at $38/bbl WTI), a 10% re-rate of its refining capacity from 466 Mb/d to 511 Mb/d (not a surprise given very high utilization rates in recent years), and plans to increase share buybacks by more than 20% this year, to C$4 billion.
