Restructuring is still very much a way of life in the Canadian industry.
Among the latest action:
- Shell Canada Ltd. will sell some service stations and lay off an undisclosed number of personnel as part of a rationalization of downstream operations.
- Gulf Canada Resources Ltd. will review nonproducing and underproducing assets as part of a restructuring program.
- BP Canada Inc. plans to sell leases involving about 15% of its gas reserves and 10% of its crude oil and gas liquids reserves.
SHELL CANADA
Shell Canada Executive Vice Pres. Donald Taylor said management is unhappy with performance downstream, which earned only a 4.4% return on capital in 1989.
He estimated it will take about 3 years to complete a rationalization of downstream operations, including sale of some of Shell Canada's 3,500 service stations and elimination of some storage terminals.
Shell plans to spend $850 million between 1990 and 1994 on downstream activity.
At the same time, Pres. Jack MacLeod said the company will spend $2.4 billion between now and 1994 on exploration and development projects.
Development spending is to include Caroline gas field north of Calgary with reserves of 2 tcf in which Shell Canada owns a 60% interest. Shell also is interested in buying a 10% interest in Caroline offered for sale by Gulf Canada.
Regulatory hearings on development of the field are under way.
GULF CANADA
Charles Schultz, incoming president and chief executive officer, said Gulf Canada's review of assets will include its interest in Terra Nova oil field off Newfoundland. He called Terra Nova a high cost project, several years away from production.
Plans for long term projects such as possible field development in the Beaufort Sea also will be reviewed. The Beaufort will continue to be a key asset, but Gulf will reduce its capital exposure and activity in the region. It plans one or two wells in the Beaufort Sea this year.
Gulf's 20% interest in the OSLO oil sands project in northern Alberta is under review. The federal government withdrew its financial support earlier this year.
Gulf's interest in Hibernia oil field off Newfoundland is not included in the asset review. Gulf expects Hibernia to be in production by late 1996.
Gulf is involved in a merger plan with Home Oil Ltd., Calgary. Schultz said the merger will strengthen both company's operations and make western Canada the "home court" for the new company.
BP CANADA
BP Canada did not disclose a dollar value for its assets for sale. They do not include previously announced plans to sell a 50% interest in the Wolf Lake heavy oil property in northern Alberta. The object of the asset sale is to improve operational efficiency and enable the company to focus on strategic assets.
BP Canada also plans to buy properties and will spend $100-125 million/year on exploration and development for the next 5 years.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.