Suncor Energy CEO Predicts Failure of Some U.S. Oil Refiners

By Joe Carroll

Oct. 23 (Bloomberg) — Some U.S. refiners may be forced to shut plants and go out of business in coming months as declining demand aggravates narrowing fuel-production margins, said Suncor Energy Inc. Chief Executive Officer Rick George.

U.S. oil refiners will also sell facilities, George said today during a conference call with investors and analysts.

“There will be some real fire sales,” said George, who leads the world’s second-largest oil-sands producer. “We should actually see some U.S. refiners shut down. Some of the weaker refiners should go out of business.”

Calgary-based Suncor isn’t interested in buying refining assets now because prices probably have farther to fall over the next two years, George said. Earlier today, Suncor trimmed its 2009 capital budget by 33 percent to C$6 billion ($4.8 billion) and slowed construction at its Voyageur project.

“Some of these assets are going to look a lot cheaper” in the future, George said. Suncor, which has lost half its market value this year, is “not for sale,” he said.

The margin from processing crude into fuels such as gasoline and diesel tumbled 60 percent this year to $4.31 per barrel, based on benchmark futures contracts traded in New York.

Syncrude Canada Ltd., a joint venture led by Canadian Oil Sands Trust of Calgary, is the biggest oil-sands producer based on 2007 annual output.

A Standard & Poor’s index of oil refiners that includes San Antonio-based Valero Energy Corp. and Tesoro Corp. plunged 74 percent this year, on course for the worst performance since at least 1995.

Tags: peak oil energy investments

This entry was posted on Thursday, October 30th, 2008 at 8:50 pm and is filed under Canada (oil sands), Suncor (SU), The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.