May 2, 2018 / 4:27 PM / 7 months ago

Suncor CEO expects Canada to move soon to ensure oil pipeline is built

CALGARY, Alberta (Reuters) - The chief executive of Canada’s Suncor Energy Inc (SU.TO) said on Wednesday he expected Prime Minister Justin Trudeau to move in the “next few weeks” to ensure that Kinder Morgan Canada’s (KML.TO) Trans Mountain oil pipeline expansion goes ahead.

Steve Williams would not say what exactly he expected Trudeau to do to guarantee the C$7.4 billion ($5.8 billion) project gets built, but told reporters he was encouraged by a long conversation he had with the prime minister last month.

“I’m encouraged by the comments they’ve made, but the proviso I put on it is that we’ve got to see these plans roll out that they’ve been working on and I think we see that over the next few weeks,” Williams said.

Kinder Morgan paused work last month on the Trans Mountain expansion, citing opposition in British Columbia, and said the company would decide by May 31 whether to go ahead with the project, which would nearly triple capacity on an existing line from Alberta to British Columbia’s coast.

Both Alberta and the federal government have pledged support to the project, including financial backing.

Trudeau’s Liberal government has also said it will assert its jurisdiction, even as British Columbia has gone to court to attempt to prove its right to block increased crude shipments west.

Williams said earlier on Wednesday that Suncor’s current growth plan was not constrained by pipeline bottlenecks but that the Calgary-based company did not expect to make any further major investments in the oil sands until market access improves.

“We have existing pipeline access to accommodate all of our oil sands production,” he said.

Canadian energy producers are struggling as increased oil sands output has run up against a lack of new export pipelines and tight rail capacity, sending the differential between Canadian oil prices and the U.S. crude benchmark CLc1 to multi-year highs.

Suncor said that while the discount that Canadian producers face nearly doubled in the first quarter compared with last year’s quarter, it had no impact on the company’s earnings or cash flow, as low crude prices were offset by better midstream and downstream returns.

Williams said he was confident that both the Trans Mountain expansion and Enbridge Inc’s (ENB.TO) Line 3 replacement, along with others moving crude south, would move ahead.

“I don’t think in the last five years I’ve had a higher degree of confidence that these lines are going to be built,” he said. “So I’m greatly encouraged.”

Suncor shares were up 0.66 percent at C$49.19 on Wednesday afternoon.

($1 = 1.2826 Canadian dollars)

Reporting by Julie Gordon in Calgary; Editing by Marguerita Choy and Peter Cooney

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