Keeping a company performing and profitable is a challenge that executive leaders take seriously.
As they should, especially for publicly-traded organizations, as investors expect companies to meet or exceed performance targets each and every quarter. Failure to meet market expectations even in a single quarter can result in steep share sell-offs and loss of investor trust.
Publicly-listed oil sands developers, such as Suncor, regularly contend with these capital market pressures, as well as additional challenges unique to the oil sands business itself.
A higher-cost supply source
Foremost on this list is the economics of oil sands production compared with other new sources of crude oil supply around the world. According to research from IHS CERA, oil sands are one of a group of higher-cost supply sources being developed globally.
Oil sands development costs are higher than those for conventional supply sources in North Africa and the Middle East. (Interestingly, costs for in situ oil sands production involving steam-assisted gravity drainage technology is actually on par with new supplies from the North Sea and offshore Brazil and West Africa.)
The fact that oil sands development can result in substantial environmental impacts which are typically costly to mitigate is another challenge that must be contended with.
Economics and environment
The economic and environmental realities of the business have many wondering: Can developers continue to produce the oil sands resource economically while investing to accelerate environmental performance at the same time?
At Suncor, we believe the answer is yes: increased environmental performance and solid economic performance can be achieved simultaneously.
The key to making this happen is collaboration. Suncor and its peers, for example, are working together on developing and implementing solutions, effectively sharing costs required to accelerate environmental performance in the oil sands region.
Canada’s Oil Sands Innovation Alliance, the industry’s most prominent example of this collaboration, has already enabled the sharing of 560 environmental technologies worth over $900 million.
While some may prefer to take a short-term view when it comes to the oil sands, the industry is taking a long-term perspective, and that bodes well for minimizing development’s impacts on the environment.