Canada’s oil sands are under two very big threats that could keep a
lid on future growth. The biggest outside threat is from
environmentalists, who would rather see Canada’s oil stay in the ground
because it’s viewed as being dirtier than conventional oil. It’s a
threat that oil producers are working to mitigate through new
technologies to reduce their carbon footprint. However, those
technologies add to the cost of production, which is already much higher
for oil sands than most other sources of oil. That said, the overall
cost of production could be coming down as producers like Suncor Energy Inc. (TSX:SU)(NYSE:SU) embrace new technologies, including driverless trucks for the oil patch.
Using technology to save a bundle
According to a report by the Financial Times, Suncor Energy
has entered into an agreement with a Japanese heavy duty truck-maker to
purchase new heavy hauler trucks for its mining operations in western
Canada. What’s unique about these trucks is the fact that they are
“autonomous-ready,” which means they are capable of operating without
the need of a driver. According to the report the company could buy
upwards of 175 driverless trucks, which, once fully deployed, could end
up saving Suncor Energy a lot of money.
Currently, Suncor Energy employs about 1,000 heavy-haul truck
drivers, which cost the company upwards of $200,000 per year per
driver according to the Times report. This implies that the
company could save $200 million annually if it can move to a completely
autonomous heavy-haul fleet. Further, driverless trucks could also boost
productivity as the trucks could run continuously.
Bringing the oil sands into the 21st century
While this move might sound far-fetched, like something out of science fiction, global mining giants BHP Billiton Limited (NYSE:BHP) and Rio Tinto plc (NYSE:RIO)
already use driverless trucks in their mining operations. Rio Tinto
uses autonomous trucks in the Pilbara region of western Austria for its
iron ore mining operations, and has done so for several years now. In
fact, Rio Tinto views the trucks as safer than trucks with a driver
because autonomous trucks do exactly what they are programmed to do,
whereas a truck with a driver has the potential for human error due to
lack of sleep or distractions.
Likewise, BHP also uses driverless trucks in its mining operations in
the Pilbara, and has been using them since late 2012. More recently,
the company expanded its use of the trucks to its coal mines in
Australia. It’s a move that’s expected to save the company money and
boost the viability of its coal business, which has come under pressure
from very weak pricing. Given the success of its recent trials the
company could continue to grow its driverless fleet in the future.
The high cost of oil sands production has always been an issue for
producers, but with oil prices down, companies like Suncor Energy are
really looking to cut costs to improve profitability. Suncor is turning
to driverless trucks, which will not only reduce operating costs, but
also boost productivity. It’s a move that, if successful, could spread
to other producers as the industry looks to increase profitability amid
weak oil prices. While driverless trucks won’t save the sinking industry
alone, they are a step in the right direction.