Suncor Energy, Canada’s second-largest oil producer, has set an ambitious goal for 2024: to reduce its operating costs in its oil sands mining business by 20%. This would make it more competitive with rival Canadian Natural Resources and other global oil producers.
How does Suncor plan to achieve this feat? By focusing on three key areas: automation, innovation, and efficiency.
Moving ore with less human intervention
One of the biggest cost drivers in oil sands mining is moving the ore from the extraction site to the processing plant. Suncor uses massive haul trucks that can carry up to 400 tonnes of ore each. These trucks require a lot of fuel, maintenance, and skilled drivers.
To cut down on these expenses, Suncor is investing in autonomous haul trucks that can operate without human supervision. The company will double its autonomous fleet to 91 vehicles this year, making it the largest user of this technology in the world.
According to Suncor CEO Rich Kruger, each autonomous truck can save about C$1 million ($741,455) per year in operating costs. The trucks also improve safety and reduce greenhouse gas emissions.
Exploring alternative mining methods and technologies
Suncor’s oil sands plants, including Fort Hills and Syncrude, are among the oldest and most complex in the industry. They use a conventional method of mining that involves digging up the ore, transporting it to a crusher, and then mixing it with hot water to separate the bitumen from the sand.
This method is energy-intensive, water-intensive, and prone to technical issues. That’s why Suncor is looking for new ways to mine the oil sands that are more efficient and environmentally friendly.
One of the alternatives that Suncor is evaluating is in-pit extraction, which involves processing the ore right at the mining site, eliminating the need for crushers and haul trucks. Another option is solvent-assisted extraction, which uses chemicals to dissolve the bitumen and reduce the amount of water and heat needed.
Suncor is also testing new technologies to upgrade the bitumen into synthetic crude oil, such as microwave heating and catalysts. These technologies could lower the capital and operating costs of upgrading, as well as the carbon footprint.
Optimizing the performance of existing assets
Suncor is not only investing in new technologies, but also in improving the performance and reliability of its existing assets. The company is implementing a digital transformation strategy that uses data analytics, artificial intelligence, and machine learning to optimize its operations.
For example, Suncor is using sensors and algorithms to monitor the condition of its equipment and predict potential failures. This allows the company to perform preventive maintenance and avoid costly breakdowns and downtime.
Suncor is also using data to improve its decision making and planning. The company is using advanced models and simulations to forecast the supply and demand of its products, as well as the market prices and margins. This helps the company to adjust its production and marketing strategies accordingly.
A promising outlook for Suncor
Suncor’s efforts to cut its oil sands costs are expected to pay off in the long run. The company projects that by 2024, it will increase its free cash flow by C$2 billion ($1.5 billion) per year, assuming a West Texas Intermediate oil price of $55 per barrel.
This will enable the company to reward its shareholders with higher dividends and share buybacks, as well as to invest in growth opportunities and renewable energy projects.
Suncor’s quest to cut its oil sands costs is not only good for its bottom line, but also for its reputation and sustainability. By reducing its environmental impact and enhancing its social responsibility, Suncor is positioning itself as a leader in the energy transition.
Source: Reuters
