Royal Dutch Shell PLC was among several oil and gas companies to have reported its capital budget plans for 2006. Shell reported a 2006 capital expenditure budget of $19 billion, a 27% increase over its 2005 budget.
Other companies that recently reported their E&P spending plans include:
• Talisman Energy Inc. plans to spend $4.4 billion (Can.) on exploration and development in 2006, which would be 36% more than its 2005 budget.
• Kerr-McGee Corp. has budgeted $1.3 billion for capital expenditures and $300 million for exploration in 2006.
• Husky Energy Inc. has allocated $2.85 billion (Can.) for capital expenditures in 2006.
Shell
Of Shell’s upstream budget of $15 billion, $10-11 billion is slated for development and ramp-up of new projects and increased exploration.
Downstream investment is planned at more than $4 billion.
The company expects to produce 3.5-3.8 million boe/d of oil and gas in 2005 and 2006. It currently produces 3.5 million boe/d and has a goal to produce 3.8-4 million boe/d by 2009.
Talisman Energy
Talisman noted that projects in the US, Canada, and the North Sea will account for more than 80% of anticipated spending.
The Calgary independent expects to drill 685 gross wells during 2006. Production is expected to average 515,000-545,000 boe/d.
About $2.1 billion will be spent on drilling, $1.7 billion on facilities and equipment, and $450 million for land and geological and geophysical costs.
Kerr-McGee Corp.
Kerr-McGee expects 2006 oil and gas production of 234,000-250,000 boe/d, about 60% gas and 40% liquids.
The capital budget for 2006 includes drilling of about 680 development wells and work on three major facilities in the deepwater Gulf of Mexico. Spending includes $580 million in Kerr-McGee’s Rockies division, $170 million in the southern division, $400 million in the deepwater gulf, and $150 million in international projects and new ventures.
Of the 680 development wells planned, about 560 will be drilled in the Greater Natural Buttes, Wattenberg, and northern Rockies areas, the company said, adding, it expects to expand activity in the Greater Natural Buttes area of eastern Utah by drilling about 220 wells. The company plans to drill 230 development wells in Wattenberg field of northeastern Colorado and 110 wells in the northern Rockies. In the southern division, Kerr-McGee plans to drill 110 development wells, mostly in South Texas, the Midcontinent, and the Gulf Coast.
Kerr-McGee’s deepwater gulf projects include Constitution and Ticonderoga fields (Kerr-McGee 100% and 50% working interests, respectively). The company expects production to start in second-quarter 2006.
In China’s Bohai Bay, Kerr-McGee’s capital program includes the development of three satellite fields, CFD 11-6, CFD 12-1, and CFD 12-1S, which are expected to achieve first production in 2006.
Husky Energy
Of Husky’s budgeted $2.2 billion for upstream projects, $1.5 billion is for work in western Canada other than oil sands operations, for which the budget is $230 million.
The western Canada work includes gas exploration in Alberta and British Columbia, further heavy oil development in Alberta and Saskatchewan, and the drilling of two wells to appraise the Summit Creek B-44 oil discovery and to test a prospect in the Northwest Territories (OGJ, Oct. 24, 2005, Newsletter).
Oil sands spending will include $145 million to complete construction of the 30,000 b/d Tucker oil sands project, which will begin production by yearend 2006 (OGJ, Aug. 2, 2004, Newsletter). The company has allocated $60 million for initial development at the 200,000 b/d Sunrise oil sands project near Fort McMurray, which received regulatory approval earlier this month.
Husky earmarked $350 million to drill and complete a fourth production well in White Rose oil field off eastern Canada, which could boost production to an estimated peak of 100,000 b/d by mid-2006. And it plans a delineation well of the nearby North Avalon pool.
As part of an international budget of $140 million, Husky plans to spend $75 million on engineering and development plans for Madura BD gas field off Indonesia.
Midstream and refined product activities, budgeted for a combined $600 million, will include completion of debottlenecking work at the Lloydminster upgrader, which will increase throughput to 82,000 b/d from 77,000 b/d. And $90 million will be used to expand the related heavy oil pipeline system in a project that includes construction of a connection to the Tucker project near Cold Lake, Alta.
Husky also will upgrade the 10,000 b/d Prince George refinery to enable it to produce ultralow-sulfur diesel and to raise capacity to 12,000 b/d by mid-2006. Husky will spend $120 million to build a 130-million l./year ethanol facility at Minnedosa, Manitoba. ✦
