And the team looked at, well, that’s our bottleneck, what alternatives do we do? So we took a water line that normally went one direction, and we made some minor modifications, reversed it to go another direction, so that as we did this maintenance, we could continue production. So those aren’t fundamental shifts, development of new resources but they’re really looking at your business, rolling up your sleeves, looking at it in detail and asking the question, what’s possible. And when you get really smart, energized people focused on what’s possible, they produce amazing results, and that’s exactly what we’re seeing at Firebag right now. The next thing, I’m not leaving a lot of room for Peter and Shelley here because this one excites me. Now when we continue to look at what possible in the in situ front.
We’re getting the most out of our existing asset base, but we’re also looking at those in situ technologies and looking at what’s possible. We’ve got pilots for enhanced using solvent static. We’ve now got a 50-50 pilot with Imperial Oil at their Aspen facility where we’ll be looking at their Ebert technology, the enhancement recovery that darn near eliminates steam and replaces it with solvent. So we’re trying to get everything out of it today while we look at this enormously large valuable resource for the long term. I’m looking at Dave and Peter, I need to apologize because this one gets me excited, but is there anything else you would add?
Peter Zebedee: Yes, maybe a couple of things, Rich. And I think it comes back to those fundamentals and these are really driven by the asset team. If you just look at the base ability of the SIM assets in and of themselves, the team has been able to improve that to levels beyond which we’ve ever been able to achieve historically. And so that just enables high consistent production. They’re optimizing all of the operating variables in real time. And they’re looking for those back to Rich’s free barrels type of concept. They’re looking for those free to no dollar type of incremental production things and very simple projects that are done within the control of the asset team we expect to unlock an additional 5,000 barrels per day that’s included in our guidance and it’s things like water piping from one unit to another.
It’s about the removal of the hydraulic restriction in the stripping unit. So these are off that the asset teams taken control of in and of themselves. And there’s a lot of bid and ownership by the team that’s driving this performance improvement. So it’s just been really — great to see.
Richard Kruger: You’ve heard a lot of comments today about our team and our people. And that’s what — they’re the ones that show up on the field and win the game. And when you have the clarity and consistency from the top and then you unleash the site leadership and the creativity of an organization, 16,000 strong. You can do amazing things. And so going back to Greg’s early question, kind of where are we on it? We’re hitting our stride, but this team has got a lot of endurance, too. And I think there’s — if you sound like we have some enthusiasm excitement, you’re reading is right because we’re seeing it and we’re feeling it, and I think that’s going to continue.
Dennis Fong: Great. I appreciate that color, Rich and Peter. My second question is related to a little bit of incremental disclosure you had in the Q1 report where you highlight 80% yield for Oil Sands Base Upgrader throughput an 85% for Syncrude. I was hoping you can talk towards how, a, that might evolve through time as the feedstock into U1 and U2 adjust? And secondarily, any further initiatives to interconnect the various mines and infuse facilities to the upgraders and between the various upgraders?
Kristopher Smith: Yes, it’s Kris here. I’ll hand it over to Peter in a moment. I think as we’re just providing disclosure to give our investors a view into actually a really key component of how we drive value. And I think it really is part of the story I mentioned in my opening comments about some of the paramedic frost treated bitumen. We’re moving down from Fort Hills and the yield uplift that we’re seeing in base plant Upgrader, and it actually was a contributor. It wasn’t the full story. The story of our base plant upgrader performance starts with reliability, availability and really utilizing that asset with full potential. But there was a piece of that story around the utilization or the yield uplift from Fort Hills parafinic drop treated bitumen, which is an example.
Because as you pointed out, we’re starting to move more volumes regionally. We actually manage the region for optimization, not specific single assets by themselves, and that translates through it. So this yield piece is a bit of a proof point. And Peter, do you want to just add like what you’re seeing in terms of yield…
Peter Zebedee: Yes. I mean certainly, those upgraders like PFT, we’re seeing plus 6% yield uplift from that PFT into the base Upgrader. And again, Dennis, this just comes back to optimizing the physical integration that we have as a company in the region. We’ve moved Firebag over to Syncrude. We’ve moved Firebag, of course, into base plants, et cetera. And that’s something that the team is looking at in near real time to deliver the most value. But beyond that, with Kent’s development team, we’re also exploring further opportunities for increased integration across our producing assets. And so stay tuned on that. There’s a lot more to come there. We still think there’s more of a to be able to deliver by increasing our optionality in the region beyond what we have today.
Richard Kruger: So Dennis, if I could add one other point to it. I keep coming back to the theme of free barrels. So that PFT, if we didn’t have the ability to get it to our upgraders and capture the entire 6% uplift ourselves, we would sell that PFT in the market. And we would likely have to split that in somewhere. Some of a refiner or someone might pay some incremental value for that. But inevitably, in a commercial transaction, you would split it. So it gets right back to what Dave was describing is with this level of integration, we’re increasingly looking at how we cut out the middleman in this thing and maximize value for ourselves. And I think PFT, the physical connection with the base plant and the upgraders are yet another example of how we’re able to do that in a way that our peers can’t do it.
Dennis Fong: Great. I appreciate the color. And good to see the field driven initiatives, as you highlighted in previous conference calls are paying some dividends here. I’ll turn it back.
Operator: One moment for our next question, and that will come from the line of Menno Hulshof with TD Cowen.
Menno Hulshof: I’ll start with a question on the Canadian diesel market. I was on another call yesterday, and it was a reference to what they were calling a global diesel recession. So I guess my question is, what is your take on that? And more importantly, how does the Canadian diesel market differ from the global markets? And how do you think, at a high level, Suncor is positioned on a relative basis?
Richard Kruger: Dave, do you want to comment?
David Oldreive: Sure. Happy to take that one. Thanks for the question, Menno. I think we’re seeing some softening in the diesel market. I mean, actually if you look at the cracks year-on-year for the first quarter, it was a more challenging environment in the first quarter of this year than last year. We were — the Harbor was down about $10. Chicago was down about $12. Our 5 221 crack softened that because of our propensity to make diesel, our capability to make diesel, we’re about $7 a barrel. We did see gasoline cracks pick up through the quarter, and that kind of helped the market overall. But even with a $7 a barrel headwind, we were able to deliver higher profitability than last year. And that’s, as Rich pointed out, that’s reliability and a bunch of other things.
. One of the things we can do in Suncor, we’ve got a network across the country that we can optimize, particularly where we put our diesel. We were able to stand up additional logistics capability in Edmonton to move more diesel East. And that allowed us to put the diesel into the most profitable markets where we can, again, sell direct to customer, taking that intermediary out of the business transaction and capture all the value. And we have logistics assets on both coasts out of Montreal and out of Berard that allow us to export diesel into profitable markets. And our trading organization has been able to do a really nice job finding those niche markets that make a lot of sense for us. And I mentioned Scandinavia earlier. Scandinavia saw some unique differentials with the conflicts nearby them and in Eastern Europe and have — and pay an additional premium for cloud barrels that we — low cloud barrels that we make in Canada.
Similarly off the West Coast, we set diesel down to markets in Latin America. They pay extra for cetane, and we make a high cetane due to our hydrocracking capabilities in the market. So some really interesting things we’ve been able to do to capture the diesel market. So I’d say, “Hey, we can’t control where the market goes. But what we can do is make sure we find the homes to the best customers and capture the full value on the value chain.”
Operator: One moment for our next question, that will come from the line of John Royall with JPMorgan.
John Royall: So I think Manav got into this a little bit, but just wanted to ask a little more specifically. Can you talk about the reliability in refining. You’ve had a really strong stretch of 3 quarters here in terms of utilization. I think it’s probably the best 3 quarters consecutively I can find in your history. Can you talk about what’s going right there? And I know 2Q is a big quarter from a turnaround perspective. But do we expect more of the same in the second half and going forward?
Richard Kruger: Kris, go ahead.
Kristopher Smith: Sure. Happy to take that one. Thanks for the question, John.
Richard Kruger: The answer expect more of the same I’ll tell you the answer ahead of time…
Kristopher Smith: The performance you going. Okay. So coming — you did point out, we had a pretty challenging first half of the year in ’23. And we made a number of changes in the downstream that I believe are beginning to move the needle, particularly in our refining assets. I’ll be honest, it’s a relatively simple stuff. We started by creating lines of accountability, setting clear expectations and really laser focus on the fundamentals. Simple things like what safety improvement — safety performance improves when the sites actually Stewart safety results through the line chain of command and not to a central organization. In a similar vein, we’ve created clear stewardship to our assets around the whole balance folio results, detailed stewardship across our asset mix, to me and then I start to Rich as well.
