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Suncor Energy (SU)Stock (Energy Industry, Independent Oil & Gas Industry)
 Suncor is facing increasing competition in the oil sands business. This increasing demand coupled with significant regulations and heightening consumer demand for environmentally safe energy alternatives are some of the major challenges that Suncor is faced with. Renewable energy and low-emission ethanol products are part of Suncor's business as well. In an effort to reduce greenhouse gas emissions and provide more environmentally safe products Suncor is already implementing wind energy projects and researching further developments.
[edit] Business Segments  [edit] Oil SandsThe Oil Sands business segment is the core of Suncor's operations, generating 45% of revenue and the vast majority of net earnings. The company utilizes conventional surface mining techniques as well as steam injection technologies to recover bitumen from the Athabasca oil sands near Fort McMurray in Alberta, Canada. Bitumen is a highly viscous, sticky, black liquid that is the primary feedstock used for petroleum production in this region (it is also often used to pave roads among other things). The bitumen is then upgraded to refinery-ready oil products and diesel fuel. Suncor's oil sands segment produced 260,000 barrels of oil per day in 2006. The process for extracting oil sands and ultimately obtaining crude oil requires a great deal of refining. These processes are expensive to operate and dramatically reduce the margin for gains in oil production relative to mining crude oil, such as that typically found in the Middle East. However, due to rising oil prices in recent years, this process has been able to remain profitable. Suncor was the first company to mine oil sands and as such they have the most experience in the business. [edit] Natural Gas and Renewable Energy
[edit] Energy Marketing and RefiningThis business is separated into two parts: one for Canada and another for the U.S. These operations market Suncor's oil products to both commercial and industrial customers in both countries.
 [edit] Trends and Forces[edit] Oil PricesBy value, 91% of Suncor's business is exposed to oil, making the company a huge beneficiary of record-high oil prices.[1] The volatility of hydrocarbon-based commodity prices plays a significant role in the health of energy businesses. In recent years, oil prices have been on the rise, which has benefited Suncor's business. However, the threat of lower demand coupled with the increasing demand for more environmentally friendly energy alternatives is a growing concern for Suncor. Global climate change is a significant issue for energy companies and Suncor has been making strong efforts to reduce greenhouse gas emissions over the years. Suncor has hedged its fossil fuels business by increasing production of low-emission ethanol products and furthering research into renewable energy sources. [edit] Pollution Control and Government RegulationsIncreasing regulations on gas emissions create new obstacles for Suncor. The Kyoto Protocol and the Clean Air Act have prompted Suncor to increase its focus on reducing emissions and finding alternative energy sources. Suncor is currently employing wind energy and biofuels as environmentally safe energy alternatives. New and tighter regulations could create more obstacles for Suncor in the future, though the company is already taking steps to both comply and find new methods that are environmentally sound. [edit] Renewable EnergySuncor's expansion into the renewable energy field with its investment in ethanol and wind energy expose it to a new market and new risks. The construction of their ethanol plant is a serious step towards renewable energy production and can be considered somewhat of a hedge on their oil sands business. However, this investment exposes Suncor to risks involved with the ethanol industry such as rising corn prices. [edit] Environmental ImpactThe process of mining oil sands--known as strip mining--is considered detrimental to the environment as it destroys the boreal forest, bogs and the rivers in Alberta. Companies involved in mining oil sands claim that forest land destroyed by the mining will colonize in the reclaimed land, though 30 years after the opening of the oil sand mining in Alberta, no such progress has been seen. Further environmental effects include the possibility of increased oil tanker traffic as well as pipeline development possibilities. Public and legislative backlash against these kinds of processes may hinder Suncor from expanding or even continuing its oil sands operations. [edit] CompetitionSuncor Energy was the first company to mine oil sands in 1967. Since then their competition has been building and recently this competition has been building at a faster rate. Suncor's major competitors in the region include: Petro-Canada (PCZ), Imperial Oil (IMO), Nexen (NXY)and Canadian Natural Resources (CNQ). Suncor trails both Petro-Canada and Imperial Oil in sales, but is only behind Imperial Oil in Market Capital. As the first company to mine oil sands Suncor is well-established in the industry. Suncor's new Ethanol plant in Sarnia, Ontario is the largest Ethanol plant in the country. Suncor also owns the largest refinery in the Rocky Mountain region of the United States, in Commerce City, Colorado.    
 Suncor Energy2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] References
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