By the OGJ Online Staff
HOUSTON, Nov. 29 -- Shell Canada Ltd., Calgary, plans a $4.4 billion (Can.) capital and exploration expenditure over the next 5 years.
The company expects to spend $1.2 billion of that on its share of the $5.2 billion Athabasca Oil Sands Project (AOSP) in Alberta and $1.3 billion on opportunities in the East Coast and Mackenzie Delta frontier areas (subject to various investment approvals).
Shell's share of AOSP costs is forecast at $3.6 billion, up 33% from the original estimate. "The primary reason for upward pressure on project costs is the high level of construction activity in the oil and gas industry. Labor availability has been a significant challenge, particularly over the past 6 months, and productivity has been well below the levels assumed in original estimates," said Shell Canada.
"However, with the recent completion of other industry projects, labor availability has improved and is expected to be generally sufficient, although there may still be pressures on individual crafts. Shell's current cost estimates assume improvements in both labor availability and productivity over the balance of the project," it said.
In 2002 alone, Shell plans to spend $1.8 billion. This includes $890 million on the AOSP project and $100 million for related modifications to its 96,550-b/d Scotford refinery, an upgrade expected to cost $450 million (OGJ Online, Apr. 26, 2001).
AOSP bitumen production still is targeted to begin late in 2002, but start-up of synthetic crude units could slip into early 2003, Shell Canada said.
Also in 2002, the company will spend $170 million on exploration, $325 million for development projects, $70 million on marketing, and $185 million on manufacturing and distribution projects.