News: Cash flow bolsters Canadian cap-ex: "One-fifth
of Shell Canadaís capital budget, C$465 million,
will be spent on the first-stage expansion of
the Athabasca oil sands facility, operated 60
percent by Shell, with 20 percent held by both
Chevron Canada and Western Oil Sands.": Saturday
10 December 2005
Suncor budgets C$2.5 billion for oil sands;
Shell Canada investing in sands, gas; Canadian
Natural Resources in Primrose
News Canadian Contributing Writer
The payoff from a prolonged cash flow
bonanza is starting to make its impact on the
Canadian oil patch.
As capital spending plans start to roll
out of Calgary head offices, Suncor Energy has
hiked its 2006 budget by 30 percent from 2005 to
C$3.5 billion, Shell Canada has pumped in an
extra 60 percent to earmark C$2.7 billion and
Canadian Natural Resources plans an initial
investment of C$600 million in its Primrose East
bitumen project in northeastern Alberta.
Suncor: C$1.8B to expansion
Not surprisingly, oil sands pioneer Suncor is
pumping C$2.5 billion into its primary interest,
with C$1.8 billion directed to the next phase of
expansion at its Fort McMurray operations.
Although production will remain unchanged
at 260,000 barrels per day next year, the
company is aiming for 360,000 bpd in 2008 and
500,000 bpd in 2012.
However, Amir Arif, an analyst with
Freidman, Billings & Co. in Virginia, speculated
that what Suncor has allocated to the oil sands
implies that the company is shooting for a 2007
Some of the capital will also go to
Suncorís Firebag venture, boosting output to
Of the remaining C$1 billion, C$250
million will lower sulfur levels at Suncorís
Ontario refinery, C$225 million will produce
low-sulfur fuels at the companyís two Denver
refineries and converting the plants to handle
synthetic crude from northern Alberta and C$325
million will be spent on natural gas exploration
One-fifth of Shell Canadaís capital
budget, C$465 million, will be spent on the
first-stage expansion of the Athabasca oil sands
facility, operated 60 percent by Shell, with 20
percent held by both Chevron Canada and Western
The objective is to add 25,000 bpd to
Athabasca production, reaching 180,000 bpd in
2009 as part of a C$7 billion plan to hit
600,000 bpd over the next decade.
Western Oil Sands is budgeting C$233
million for the oil sands in 2006, with the
objective of hitting a net 120,000 bpd in the
next 8 to 10 years.
Shell: C$405M to unconventional gas
Shell Canada is backing its commitment to
grow gas production by pumping C$405 million
into the unconventional sector.
A primary target is the Tay field in the
west-central region of Alberta where an 800
billion cubic foot raw gas find last year has
spurred the companyís reawakening interest in
the gas sector.
Shell Canada also expects to spend C$45
million on its share of the Mackenzie Gas
Project, which is scheduled to enter the public
hearing phase in January and get a final
decision from the partner companies in late 2006
or early 2007.
Canadian Naturalís plan to invest C$600
million in Primrose East underpins its goal of
producing 120,000 bpd, throwing out a challenge
to Imperial Oil, the regionís leader at 137,000
Current output from Wolf Lake/Primrose is
50,000-60,000 bpd, but is expected to average
80,000 bpd by mid-2006 and chase the 120,000 bpd
objective in early 2009.
The independent predicts Primrose East
will generate C$1 billion in capital spending
and C$600 million in royalty and tax payments
over 25 years.