Kris Smith: Right. Thanks, Neil. I would say, I’ve been very pleased with how the organization responded to safety, particularly since I’ve taken on the Interim CEO role. The entire operations organization led by the senior operating team, many of them — or a number of them are sitting here with me on this call today. We put in place a very defined and specific and focused safety improvement plan, one that is reinvigorating and driving our focus on our operational excellence management system and operational risk management. That’s engaging with our frontline. We are rolling out human organizational performance principles. We’ve been engaging with the organization on those actively over the last number of months, as well as Peter has talked about in the past, some of the safety technology investments we’re making around the specific risk areas that we saw in the last two years that have led to tragic fatality incidents.
I’m encouraged by what I’ve seen over the last six months. I’m always — I always say, this is a journey, and you don’t measure this thing in days and months. But what I would say is, since I’ve taken the interim CEO role, I’ve been pleased with the direction I’ve seen in safety performance, both in personal safety and process safety. And we’ve seen a reduction in the number of incidents over that period of time. But, again, this focus has to continue. It has to — it’s a daily focus for this organization. For investors, I mean how you measure that, obviously, is in results at the end of the day. But what I can assure you and all our investors is that, the focus of this operating team is squarely on safety first in this organization. And let me talk about Commerce City.
I think it’s a great question you just asked, Neil, about Commerce City and in the aspect of safety. So we had an extreme weather incident in December. Everyone saw the impact of the entire refining industry during that period of time. Our own facility was significantly impacted by that extreme weather. And we had a number of equipment failures and some loss of containments. And the team, the operating team down there took the measure to put that facility in safe mode and take the right steps to save that facility and ensure that it is in — that we have it in a state and condition that we can operate as safely going forward. I’ve been incredibly pleased and proud of the work that the team has done down there in terms of the full inspection and repair of the facility.
We’ve already started the progressive restart of the facility and are on track with where we expect it to be. But to me, that’s an example, while no one likes to see incidents like that, as an example of how an organization responds when it comes to safely managing your assets.
Neil Mehta: Thanks, Kris.
Kris Smith: All right. Thanks, Neil.
Operator: Thank you. And our next question comes from the line of Menno Hulshof with TD Securities.
Menno Hulshof: Thanks, and good morning, everyone. I’ll start with the base mine extension since it ties into some of the other questions that were asked previously. My understanding is that a decision on sanctioning the extension to address mine depletion versus leaning more on in situ production to keep the upgraders full is still expected by 2025. But maybe you could just give us your latest thoughts on the various options and what you consider most likely at this stage?
Kris Smith: Thanks, Menno. Yes, as you point out, I mean, our baseline end of mine life in the mid-2030s. And so we’re working through various options for replacement of that bitumen supply. Our focus is primarily in those upgraders full. We do have a number of options you just outlined a couple of them in your question. We do have the base mine extension application in place. We’re continuing with that application but it is not our only alternative or option. We do have the option, which we’re also progressing around further in situ development just east of the — of our base plant contiguous to our current mine operations is both our Lewis lease as well as Firebag, which also has significant resource left. Too early to call in terms of which horse is in the lead race, but those options are both being worked very hard.
And the other piece I’d mention as well and kind of back to early on the call, we talked about the connectivity amongst the operations and our ability to bring bitumen into the upgrader from Fort Hills now. It’s 60,000 barrels a day or sorry, 40,000 barrels a day of capacity that can be further increased and as well we can bring more Firebag in. So we have lots of optionality in terms of bitumen supply and the upgrader. The team is working hard on all of those options. It’s all about what’s going to be the most economic and risk-based option that we’re going to supply that upgrader. I expect over the next 24 months, we’re going to start landing on which option is going to be the lead horse.
Menno Hulshof: Terrific. And so maybe I’ll just pivot to the macro with the question on diesel. We’ve obviously seen come down quite a bit over the last several weeks. So what is your read on this pull back. What are your expectations for Canadian diesel tracks over the midterm? And maybe you could just remind us of how much flex you have on dialing the products slate up and down for distillates across your four refineries?
Kris Smith: Sure. And remember too, as well, Menno, when we think about diesel, we think about it in two aspects as well. There’s our refining business, which we are tooled we’re more at 211. We’re not a 321 refining network, which is great. And it does give us some flexibility to tool up a bit more to diesel. But also recall, too, in terms of our synthetic crude oil and our diesel make up in our Oil Sands business. So certainly, we’re levered to the side of distillate rather than gasoline across the whole system. The view on diesel, I mean, certainly, not expecting that we’re going to see the extraordinary cracking margins that we saw in 2022. But our expectation is we’re still going to see a very robust distillate market. We’re still seeing good demand on distillate even though it go back slightly here, recently.
But still, I think the structural foundation for strong distillate tracks is still there. That’s the expectation that we’re going to see through the balance of the year. And if you just look at global €“ global inventories and demand. I think gasoline, gasoline has actually strengthened a little bit. It really came off at the end of Q4, not a surprise given the seasonality of that. But gasoline, we think the cracking margin should be at/or around historical norms. I don’t see a big, big pullback on gasoline. But the story, I think, in 2023 is going to continue to be distillate and it’s going to still be very supportive of both the downstream business as well as our diesel make out of oil sands.
