Early indicators suggest that oil and gas companies will be sharply ramping up their capital spending plans for 2001.
Certain US independent exploration and production companies have recently announced hefty increases in their spending plans for 2001.
Meanwhile, two large Canadian companies-Shell Canada Ltd. and Petro-Canada-unveiled their intentions to boost spending commitments for next year by more than $1 billion (Can.) each: Shell Canada Ltd. by $1.8 billion and Petro-Canada by $1.4 billion.
US independents
A number of US-based independents have heralded increases in their 2001 capital outlays.
Cross Timbers Oil Co., Fort Worth, plans to spend $200 million on exploration and production projects in 2001. As a result, the company anticipates a 15% hike in natural gas production. "Given current commodity markets, we can fund the 2001 capital budget with about one half of cash flow and target a 15% growth rate for gas production," said Steffen E. Palko, Cross Timbers vice-chairman and president.
Cross Timbers plans to drill about 245 wells (178 net) and perform about 380 (271 net) workovers and recompletions.
Pure Resources Inc., Midland, Tex., unveiled a $160 million spending plan for 2001. This total includes about $60 million for development projects, $34 million for exploration programs, $42 million for probable or possible projects, and about $22 million for the acquisition of additional acreage and seismic data, Pure Resources said.
About 78% of the company's proposed budget will be spent on 210 projects in the Permian basin. Pure Resources' 300 capital projects are spread among the Permian basin, South Texas, and the San Juan basin.
Pure Resources-which is a combine of Titan Exploration Inc. and Unocal Corp.'s Permian basin business unit-expects to reach an average production of 41,000-43,000 boe/d in 2001, of which 60% will be gas and the remainder oil.
Plains Resources Inc., Houston, announced a $120 million capital spending plan, which includes a 50% increase in upstream spending from 2000. About $100 million of that total will be spent to drill 217 wells in California. These include 56 injector wells.
Panaco Inc., Houston, set a $37.1 million capital budget for fiscal year 2001. The budget includes continuing Panaco's exploration program and the East Breaks 109 and 110 field programs in the Gulf of Mexico. More than $2 million is earmarked for workovers, equipment modifications, and repairs.
Shell Canada
Shell Canada projects spending $4.2 billion over the next 5 years to increase oil and gas production, with strong emphasis on oil sands development in northern Alberta. It did not detail spending beyond 2001.
Shell will spend $1.13 billion in 2001 on its $4.1 billion Athabasca oil sands project at Muskeg River in northeastern Alberta, scheduled to come on stream in 2002. Shell has a 60% interest in the project, in which Chevron Corp. and Western Oil Sands LP also hold interests.
The company will also spend $180 million in 2001 on upgrades at its Scotford refinery, near Edmonton, which will be used to process bitumen from the oil sands project.
Shell will also earmark $350 million for exploration and related projects, including natural gas exploration off Canada's East Coast. In addition, it plans to spend $180 million on its marketing, refining, and distribution operations.
Petro-Canada
Meanwhile, Petro-Canada expects to spend $990 million on upstream work next year, up $5 million from this year's figure. About $380 million will be spent on exploration and production activities aimed at Western Canadian gas reserves. About $55 million will be spent on gas exploration in the Mackenzie Delta.
The company also intends to spend $330 million on Canadian oil sands development. It will commit $110 million to the ongoing Syncrude expansion and $220 million to construction of production facilities at MacKay River.
In addition, Petro-Canada intends to spend $200 million on offshore activities, including $110 million on Terra Nova project on the Grand Banks off Canada. Terra Nova should begin production midyear.
About $40 million is earmarked for Hibernia field, and $50 million will be spent on other projects off Canada's East Coast.
Also next year, Petro-Canada intends to spend $400 million in the downstream segment, up from 2000's $280 million figure, in part because of investment to comply with Canada's gasoline regulations. A retail site program will also be a big-ticket item.