Canada's largest oil producer is looking to abandon some of its high-cost and greenhouse gas intensive oil sands assets, according to Suncor Energy's CEO Steve Williams.
Williams mentioned the move at the Barclays convention in New York, stating: "We've begun to have conversations with the government of Alberta and the current regulators about the design of their policy, which actually requires the maximum amount of resource to be extracted regardless of the economic or environmental value."
Suncor wants to abandon the deposits in question in order to ease the effect of rules that were created to maximize the output from oil sands on land leased from the government. The plan to abandon the sites is being utilized as a cost-cutting measure not just by Suncor, but other oil companies as well who continue to look for money-saving measures in the face of declining commodities prices.
Not only are the sites among the highest in carbon emissions, but they are expensive to run. That expense will only increase in the near future, since the province of Alberta is planning to double its carbon tax and has announced that it will cap the greenhouse gas emissions of tar sands operators at 100 million metric tons.
Oil sands operations emit around 70 million metric tons per year, which is about a quarter of the emissions for Alberta. Operators are concerned about what effect the moves will have on their ability to develop their leases in the long haul.
Despite the new measures, the government of the province has not explained how it will allocate any room left under the cap. In the past, the province has tried to maximize the production on its public lands so as to glean as much as it could from royalty payments.
Lincoln Brown for Oilprice.com
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The equivalent of two coal fired plants in China.