Canada’s Suncor Energy to slash C$1 billion in investments, freeze hiring as crude plunges

Canada's largest oil and gas company Suncor Energy Inc, said yesterday it would cut about 1,000 employees and contractors, freeze hiring and slash C $1 billion in capital spending in response to falling crude oil prices, Reuters reported.

According to Suncor, it would also defer some capital projects that had not yet been sanctioned such as MacKay River 2 in northern Alberta as also the White Rose Extension offshore Atlantic Canada.

The company retained the production outlook for  2015 at 540,000 to 585,000 barrels per day.

"Today's cuts are consistent with our commitment to spend within our means and maintain a strong balance sheet," Suncor chief executive Steve Williams said in a statement.

"We will monitor the pricing environment and take further action as required."

The company's revision of its 2015 capital budget to between C$6.2 billion to C$6.8 million, from C$7.2 billion to C$7.8 billion when it was presented in November, brought it in line with other Canadian oil producers that had cut spending with the declining oil prices.

Benchmark crude oil prices declined over 50 per cent since June in response to a global supply glut and producer group OPEC's refusal to cut production. US crude was down to a near six-year low of $44.20 a barrel yesterday.

The cuts come as the latest blow to Canada's energy industry and economy as plunging prices hit the economics of the nation's oil sands development, among the most expensive reserves, Bloomberg reported.

According to Tim Lane, deputy governor of the Bank of Canada, the rout of oil might delay the Canadian economy's return to full potential.

He said in a speech in Madison, Wisconsin that oil extraction made up 3 per cent of Canada's output and crude oil comprised 14 percent of exports.

Output from oil sands located mostly in Alberta had increased fivefold to 2.3 million barrels a day between 1993 and last year. He added, oil-sands investment more than doubled to C$30 billion from 2006 to 2013.

''We will closely monitor its broader impacts on growth and the delay it may cause to the economy's return to its production potential,'' Lane said.

Canadian Natural yesterday cut its 2015 spending plan by 28 per cent from the initial projection forecast and while it was not cutting any jobs, hiring had been frozen according to, Corey Bieber, chief financial officer, who spoke in a phone interview.