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No CEO likes to see two big screaming negative headlines about their company next to each other. But what doesn't kill Suncor CEO Steve Williams will only make him strong enough to face the oil sands giant's next challenge – and it may not be the one investors have their eye on.
The first of the two news items was entirely predictable. Suncor's decision to kill the $11.6-billion Voyageur bitumen upgrader had been signalled last fall, officially stalled this winter and killed on Wednesday night, all against the backdrop of an impending glut of the light sweet crude Voyageur would have generated.
Suncor's share price has actually risen slightly since the announcement, suggesting that the market approves of the decision's timing; with U.S. shale seemingly turning up under every rock over the past six months, it's good news that Suncor is finishing its deliberations on Voyageur, not starting them.
The company's decision to fold Voyageur also comes amid the possibility that new routes will be opened up for its heavy oil to be sent to someone else's facility for refining. Neither TransCanada's Keystone XL pipeline nor Enbridge's Flanagan South pipeline are guaranteed to happen, but if they do, Suncor would join other oil sands producers – of which it is Canada's largest by market value, despite a stock price that has generally gone nowhere in recent years – in reaping the benefits. In the meantime, there's always rail, which is booming.
Add to that the possibility that Voyageur could always be restarted if the fracking revolution stalls – it was halted in 2008 and resumed not long afterwards – and mothballing the project now seems like a no-brainer.
The second piece of Suncor news appears less dramatic, but it could be the one to cause much bigger headaches. 350,000 litres of industrial waste water being accidentally dumped into a pond adjacent to the Athabasca River is a disturbing accident, even if it's not a Deepwater Horizon (757-million litres spilled) or an Exxon Valdez (40-million litres). That said, both the spill and the company's clumsy publicity strategy since the incident allowed environmental groups and the Alberta government to get out in front of the story.
Previously, Suncor's main competitive advantage over other oil producers was Voyageur. With that gone, and with it receiving no greater or lesser benefit from new pipelines than its competitors, the company will need to avoid gaffes like this spill, at a minimum. And with a stock price that has generally gone nowhere for the past five years, Suncor has a real battle on its hands to convince investors that they should back it.
Dave Morris is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Dave on Twitter at @morrisdave.
Editor's Note: An earlier online version of this article incorrectly stated that PetroCanada was the original owner of the Voyageur project. This online version has been corrected.