Page 73 - Suncor AR English

Management believes the execution of major projects • The commissioning and integration of new facilities

presents issues that require prudent risk management. within our existing asset base could cause delays in
Suncor may provide cost estimates for major projects at the achieving guidance, targets and objectives.

conceptual stage, prior to commencement or completion
The failure to sanction or build a project could result in
of the final scope design and detailed engineering
additional costs, including abandonment and reclamation
necessary to reduce the margin of error of such cost costs, to shut down the project, and such costs could be
estimates. Accordingly, actual costs can vary from
material to Suncor.
estimates, and these differences can be material. Project
execution can also be impacted by:
Cost Management
• Failure to comply with Suncor’s project implementation Production from oil sands through mining, upgrading and

model;
in situ recovery is, relative to most major conventional
hydrocarbon reserves, a higher cost resource to develop
• The availability, scheduling and cost of materials,
equipment and qualified personnel;
and produce. Suncor is exposed to the risk of escalating
operating costs in both its oil sands business and other
• The complexities associated with integrating and
businesses, which could reduce profitability and cash flow,
managing contractor staff and suppliers in a confined and materially adversely affect Suncor’s business, financial
construction area;
condition and results of operations, and may reduce cash
• Our ability to obtain the necessary environmental and flow available for growth or dividends and major project

other regulatory approvals;
capital costs. This may constrain Suncor’s ability to execute
high-quality projects that deliver lower operating costs.
• The impact of general economic, business and market Factors contributing to these risks include, but are not
conditions;
limited to, the skills and resource shortage, the long-term
• The impact of weather conditions;
success of existing and new in situ technologies, and the

• Our ability to finance growth if commodity prices were geology and reserves characterization of in situ reserves
that can lead to higher steam-to-oil ratios and lower
to decline and stay at low levels for an extended
period;
production.

• Risks relating to restarting projects placed in safe mode,
including increased capital costs;
Government Policy
Suncor operates under federal, provincial, state and
• The effect of changing government regulation and
municipal legislation in numerous countries. The company
public expectations in relation to the impact of oil is also subject to regulation and intervention by
sands development on the environment; and
governments in oil and gas industry matters, such as land
• Risk associated with offshore fabrication and logistics.
tenure, royalties, taxes (including income taxes),

In addition, there are certain risks associated with the government fees, production rates, environmental
protection controls, safety performance, the reduction of
execution of our exploration, production and refining
projects. These risks include, but are not limited to:
greenhouse gas (GHG) and other emissions, the export of
crude oil, natural gas and other products, the company’s
• Our ability to obtain the necessary environmental and
interactions with foreign governments, the awarding or
regulatory approvals;
acquisition of exploration and production rights, oil sands

• Risks relating to scheduling, resources and costs, leases or other interests, the imposition of specific drilling
including the availability and cost of materials, obligations, control over the development and

equipment and qualified personnel;
abandonment of fields and mine sites (including restrictions
on production) and possibly expropriation or cancellation of
• The impact of general economic, business and market
conditions;
contract rights.

• The impact of weather conditions;
Changes in government policy or regulation or
interpretation thereof, have a direct impact on Suncor’s
• The accuracy of project cost estimates;
business, financial condition, results of operations and cash
• Our ability to finance growth;
flow, as evidenced by such initiatives as the Alberta

• Our ability to source or complete strategic transactions;
government’s royalty review program in 2007, and, more
recently, by trade sanctions in Libya (which have since been
• The effect of changing government regulation and
lifted) and Syria imposed by Canadian and other
public expectations in relation to the impact of oil international governments, and increased production taxes
sands development on the environment; and
in the U.K. Changes in government policy or regulation can
also have an indirect impact on Suncor, including

SUNCOR ENERGY INC. ANNUAL REPORT 2013 69