Total SA plans a $19 billion capital expenditure for this year, with refining and marketing accounting for $2.5 billion and petrochemicals $1.3 billion. The balance is dedicated to upstream, where a $1.8 billion sustained exploration effort is planned.
Other oil and gas companies have recently released their spending plans for 2008. These include:
- Marathon Oil Corp. announced an $8 billion capital, investment, and exploration budget for 2008 compared with 2007 spending of $4.8 billion.
- Suncor Energy Inc., Calgary, has approved a $7.5 billion (Can.) capital spending budget for 2008, about 80% of which will target growth in oil sands projects.
- Anadarko Petroleum Corp. has approved total capital expenditures of $4.5-4.7 billion for 2008, including about 20% for exploration.
- Houston independent Newfield Exploration Co. announced a $1.6 billion capital investment program for 2008, of which $620 million is allocated to the US Midcontinent region.
- Fort Worth independent Range Resources Corp. reported capital spending plans totaling $1.065 billion for 2008. This represents an 18% increase over the company’s 2007 budget.
- Petrohawk Energy Corp., Houston, boosted its 2008 capital budget to $800 million from $700 million last year.
- Houston independent Ultra Petroleum Corp. approved a 2008 capital budget of $755 million compared with $714.5 million spent in 2007.
- Brigham Exploration Co. said its board approved a $134.4 million capital expenditure budget for 2008.
Total
Last year, Total dedicated $16 billion and added 1 billion boe from exploration. Total Chief Executive Christophe de Margerie said, “We will find barrels by exploration and not acquisition.”
Total’s upstream production last year grew by 1.5% over 2006 to 2.39 million boe/d, de Margerie reported.
De Margerie maintained his expectations of an average 4%/year production growth to 2010 based on $60/bbl Brent crude. At $80/bbl, production would be less by 50,000 b/d in 2010 under production-sharing contracts.
De Margerie said although 2008 production is uncertain because of the current economic and geopolitical environment, “even at an $80/bbl, [2008 production] will exceed that of 2007.” Total is banking on new fields due on stream in Yemen and Congo, and the ramping up of Anguille in Gabon, Dolphin in Qatar, and Rosa in Angola.
The group’s proved reserves replacement rate fell to 23% from 102%, partially because renegotiation of the Sincor contract in Venezuela reduced Total’s stake to 30% from 47%.
Maintaining a proved reserve life of 12 years and proved and probable reserve life over 20 years will require development of new capacities, he said. Numerous projects extending to 2015 should bring production close to 3.3 million boe/d.
Marathon Oil
Marathon’s increased spending stems primarily from a 180,000 b/cd expansion at its 245,000 b/cd Garyville, La., refinery, the Athabasca oil sands project in Alberta, and an associated expansion and heavy oil upgrade at its 100,000 b/cd Detroit refinery (OGJ, Nov. 12, 2007, Newsletter).
Clarence P. Cazalot Jr., Marathon president and chief executive officer, noted that “reinvestment in the business will contribute much-needed growth in US refining capacity.”
Marathon’s 2008 worldwide exploration and production budget of $3.2 billion is a 23% increase over last year’s E&P budget. Worldwide production capital spending in 2008 is projected at $2.1 billion, up 37% from last year.
Refining, marketing, and transportation spending is expected to total $3.5 billion in 2008, up from $1.7 billion in 2007.
Suncor Energy
Suncor’s budget for oil sands projects will enable the expansion this year of in situ bitumen production capacity to 350,000 b/d and support future construction of a third upgrader to increase oil sands production capacity to 550,000 b/d in 2012.
Another $1.5 billion is allocated for existing operations. About $1.2 billion of that will enable construction of Suncor’s North Steepbank mine extension (which will replace bitumen from mined-out areas), a planned maintenance shutdown of Upgrader 1 in the second quarter, projects to improve reliability and productivity of oil sands assets, and emissions-control equipment.
About $275 million also will support production of 205-215 MMcfd of gas equivalent in 2008.
Downstream plans this year call for $225 million for sustaining operations following growth projects at two refineries during the past 2 years at Sarnia, Ont., and Commerce City, Colo.
Anadarko Petroleum
Anadarko expects 2008 oil and gas production to reach 205-210 million boe and says it will bring Blind Faith field in the deepwater Gulf of Mexico on stream.
Of the company’s proposed outlays, 30% will be spent in the Rocky Mountains, 20% in the US Southern region, 25% in the deepwater Gulf of Mexico, 15% for international and frontier activities, and 10% for midstream facilities.
Anadarko plans to drill 2,700-3,000 development wells in resource plays onshore in the US—85% in the Rocky Mountains, and 15% in its Southern region, including the Delaware basin, Eastern Chalk, and Carthage areas of Texas.
In the Rocky Mountain region Anadarko also will add a cryogenic processing facility at its Chapita plant in Greater Natural Buttes to double processing capacity to 500 MMcfd, and will add 400 MMcfd of gathering capacity at the Fort Union system in the Powder River basin, bringing its total capacity to 1.3 bcfd.
In the deepwater gulf Anadarko will focus on development drilling, particularly in the eastern gulf and the K2 unit, and will drill 6-8 exploration and appraisal wells targeting Miocene and Lower Tertiary objectives.
Anadarko has allocated most of its international capital toward projects in Brazil, Alaska, Algeria, and China, including deepwater activities in West Africa, the South China Sea, and Peregrino field off Brazil.
Newfield Exploration
Newfield plans to devote $460 million of its Midcontinent spending to the Woodford shale in southeastern Oklahoma’s Arkoma basin. The company has 165,000 net acres in the Woodford shale.
The Woodford program calls for Newfield to drill and operate 100 horizontal wells this year. Newfield also plans to participate in 60-70 nonoperated wells there.
Newfield plans to spend $310 million in its Rocky Mountain region operations, $245 million on land wells across Texas, and $240 million on Gulf of Mexico projects.
Internationally, Newfield plans to spend $155 million. In Malaysia, Newfield plans to start production this year in Puteri and East Belumut-Chermingat fields.
Range Resources
Range Resources’ budget this year includes $783 million for drilling and recompletions, $109 million for land, $51 million for seismic surveys, and $122 million for the expansion and enhancement of gathering systems and facilities.
Of the drilling and recompletion capital, 95% is attributable to lower-risk development and exploitation activities, and 5% is attributable to exploration projects, Range said.
This year Range expects to drill 968 gross (715 net) wells and undertake 82 (66 net) recompletions. About 56% of the budget is attributable to the US Southwest region, 40% to the Appalachian region, and 4% to the Gulf Coast region.
Included in the budget are 187 net coalbed methane, tight gas, and shale wells in Nora-Haysi field in Virginia, 92 net Barnett shale wells in the Fort Worth basin, and 60 net Marcellus shale wells in Appalachia.
The remaining 376 net wells are primarily tight gas and oil wells in the company’s other core areas.
Petrohawk Energy
Petrohawk raised its spending plans based on several corporate developments, including recent acquisitions that provide growth opportunities, expansion on exploratory success at Elm Grove and Terryville gas fields in northwestern Louisiana, and initial positive drilling results in the northern part of the Arkansas Fayetteville shale gas acreage holding.
The company, which was operating 18 rigs in late January, expects the 2008 program to involve 22 operated rigs to drill 350 operated wells.
The Elm Grove budget is $293 million for 140 planned operated wells. Petrohawk closed a $169 million acquisition of properties in the field. It has spud an offset to its first horizontal Lower Cotton Valley Taylor sand well, Killen 13-3H, which came on line at 16.5 MMcfd at yearend 2007.
The Fayetteville shale budget is $278 million for 150 operated and 50 nonoperated wells. The company brought on production 20 wells in 2007 in the Hurricane prospect in Van Buren County that averaged 2.3 MMcfd/well for 30 days.
Ultra Petroleum
Ultra expects its 2008 production to reach 135-140 bcf of gas equivalent, 18-22% higher than its 2007 production. Ultra plans to drill 26 delineation wells in 2008 under its 5-year plan to drill 120 delineation wells.
Michael Watford, chairman, president, and chief executive officer, said the company plans to drill 240 gross (113 net) wells in Wyoming. About 20% of the net wells will be devoted to delineation.
“It is extremely important for us to continue defining the Pinedale field so we can get our arms around the actual size of the resource,” Watford said.
Ultra develops long-life natural gas reserves in Pinedale and Jonah fields. The company increased its 2009 production target to 170-175 bcf of gas equivalent from its previously announced target of 160-165 bcf of gas equivalent.
Brigham Exploration
The Austin, Tex.-based independent plans to spud 33 wells in 2008 with an average working interest of 54%. About 76% of the 2008 capital budget is allocated to drilling expenditures, a 6% increase compared with 2007.
Brigham plans to spend $52.4 million on its Rocky Mountain region where it expects to drill 17 wells in the Williston basin. The company also will spend $51.7 million on its onshore Gulf Coast region. Another $13.6 million of the 2008 exploration and development capital expenditures will be allocated to the Anadarko basin.
