NORTH AMERICAN FIRMS HIKE BUDGETS FOR 1995

North American petroleum companies are adapting capital spending plans to fit changing industry conditions.

Significant spending hikes upstream and downstream are in store, judging from a sample of budget plans disclosed last week.

Phillips Petroleum Co. approved $1.4 billion for capital projects in 1995, an 18% jump from estimated outlays of $1.188 billion in 1994.

Among other companies' capital spending plans:

Consolidated Natural Gas Co., Pittsburgh, plans a 1995 capital budget of $444.6 million, an increase of $8.2 million from expected 1994 outlays. Its budget breaks out as $169.4 million for exploration and production, $91.8 million natural gas transmission, $163.4 million natural gas distribution, and $16.5 million for energy services, which started operations last Sept. 1.
Santa Fe Energy Resources, Houston, plans 1995 capital spending of $190 million, about 50% more than 1994 outlays. The focus will be on exploiting an inventory of about 1,600 identified oil and gas drillsites.
Lyondell Petrochemical Co., Houston, plans capital spending of $170 million for 1995, up from a 1994 budget of $110 million. Petrochemical operations will account for about $110 million of the 1995 total, while $60 million is budgeted for projects at Lyondell-Citgo Refining Co. Ltd.'s 265,000 b/cd Houston refinery, mainly for environmental projects. Included in 1995 projected spending for petrochemicals are an expansion of the alkylation unit and debottlenecking of olefins capacity at Lyondell's Channelview, Tex., petrochemical complex and debottlenecking of its LaPorte, Tex., polypropylene unit.
In Canada, Suncor Inc.'s Calgary resource division plans a $150 million (Canadian) capital spending program in 1995, matching the 1994 level. The division, which focuses on exploration and development of conventional oil and gas, plans to hike such production by 17% in 1995. Suncor, Toronto, best known for its oilsands division, also is boosting outlays to expand operations at its Fort McMurray, Alta., oilsands complex (OGJ, Dec. Newsletter).
Syncrude Canada Ltd., Edmonton, plans to invest $1 billion (Canadian) during the next 5 years in its Fort McMurray oilsands operation and a further $1 billion by 2004. Syncrude will spend $300 million to begin a truck and shovel mining operation at Fort McMurray in 1998. The company plans to boost its synthetic crude oil production to 220,000 b/d by 2004 from 194,500 b/d.

PHILLIPS BUDGET

About 75% of Phillips' 1995 budget is earmarked for oil and gas exploration and production and gas and gas liquids operations. The remaining 25% will go for refining, marketing, transportation, and chemicals.

Of Phillips' 1995 E&P budget of $859 million, an increase of 14% from 1994 outlays, $480 million will go for international projects that include Ekofisk field redevelopment off Norway; J-Block, Britannia, and Armada fields off the U.K.; and Xijiang fields development off China. About $261 million is earmarked for U.S. development and production, including Garden Banks development in the Gulf of Mexico.

Phillips estimates it will spend about $118 million for exploration, split 50-50 between U.S. and non-U.S. projects, with almost half the U.S. budget devoted to subsalt plays in the Gulf of Mexico.

In its refining/marketing/transportation sector, Phillips slated outlays of $191 million, double 1994 spending. About 62% of the budget is directed toward projects designed to boost profits, with $41 million earmarked for safety and environmental projects.

Phillips expects to spend $89 million company-wide for safety and environmental programs.