Suncor Energy says it is cutting its capital spending by 26 per cent this year, adding the company to the list of Canadian oil producers to slash their budgets in recent weeks.
The move, announced late Monday, sees the Calgary-based company reduce its capital program in 2020 by $1.5 billion to a range between $3.9 billion and $4.5 billion.
Canada’s oil and gas sector is being hit with the fallout of plunging crude prices linked to a market share battle between Saudi Arabia and Russia, and lower demand because of the COVID-19 pandemic
“The simultaneous supply and demand shocks are having a significant impact on the global oil industry,” Suncor’s chief executive Mark Little said in a statement.
“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.”
Husky Energy, Cenvous Energy, MEG Energy and Seven Generations Energy are among the list of other companies to also announce spending reductions recently.
Suncor, a producer and refiner, is putting several projects on hold.
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.
“Our business model and financial strategy are designed to withstand volatile environments,” Little said.
The plunge in prices has also had a severe impact on oil producers in the United States. On Tuesday, Chevron announced it slashed its 2020 capital spending plan by 20 per cent, or about $4 billion US.