CANADIAN INDUSTRY TO STEP UP SPENDING 7.4%

Capital and exploration spending plans of the Canadian petroleum industry show an increase of 7.4% to $8.5 billion (U.S.) for 1994. Canadian spending rose 14.1% to $7.95 billion last year. Exploration and production spending will post a substantial increase for the second straight year. E&P outlays are expected to advance 9.8% to $5.7 billion in 1994. This follows a sharp increase of 34.2% in 1993, when spending moved up to $5.2 billion from $3.9 billion in 1992. Baker Hughes Inc.'s tally
Feb. 21, 1994
4 min read

Capital and exploration spending plans of the Canadian petroleum industry show an increase of 7.4% to $8.5 billion (U.S.) for 1994.

Canadian spending rose 14.1% to $7.95 billion last year.

Exploration and production spending will post a substantial increase for the second straight year. E&P outlays are expected to advance 9.8% to $5.7 billion in 1994.

This follows a sharp increase of 34.2% in 1993, when spending moved up to $5.2 billion from $3.9 billion in 1992.

Baker Hughes Inc.'s tally of active rotary rigs reflects the increase in Canadian upstream activity.

Canada's active rig count advanced to an annual average of 184 in 1993 from only 97 in 1992. Prior to that rebound, the Canadian rig count had been falling since 1985 when it averaged 310.

This year began on an even more positive note than 1993 with an average 300 rigs working in January, up from only 166 in January 1993 and 129 in the same month of 1992.

Oil & Gas Journal predicts a 14.2% increase in Canadian well completions this year to 11,231 (OGJ, Jan. 31, p. 78).

A survey by Salomon Bros. Inc. shows a substantial gain in Canadian E&P spending this year. The New York investment firm pegs planned Canadian E&P spending at $6.009 billion (U.S.), a jump of 20.6% from 1993.

Canadian non E&P spending is also expected to increase in 1994, rising 2.9% to $2.83 billion. In 1993, non-E&P spending fell 11% to $2.75 billion.

DOWNSTREAM OPERATIONS

As in the U.S., there have been wide swings in Canadian pipeline spending during the past few years, and this has played a large role in downstream outlays.

Refining and marketing spending will fall after moving up sharply last year. Refining spending will be down 2.5% at $430 million on the heels of a 28.2% increase last year to $441 million.

Marketing outlays will be down 19.1% this year at $487 million, compared with a 44.7% increase last year to $602 million.

Petrochemical capital spending will rise 2.3% in 1994 to $310 million. Spending last year was $303 million, down 3.9% from $322 million in 1992.

The biggest change will be in transportation spending, particularly outlays for crude oil and petroleum product pipelines.

Canadian transportation spending plans call for a 39.3% increase to $1.2 billion. Total transportation spending was $843 million in 1993, down 41.8% from 1992.

Outlays for crude oil and natural gas pipelines will soar to $234 million from only $30 million in 1993 and $7 million in 1992. Natural gas pipeline investments will move up to $800 million from $692 million in 1993.

Gas pipeline construction is planned at 1,326 miles (OGJ, Feb. 7, p. 23). This is up from 1,007 miles planned for 1993. Crude and product pipeline mileage planned moved up to 467 in 1994 from only 77 miles in 1993.

Spending on all other types of transportation will increase to $140 million from $121 million in 1993.

COMPANY PLANS

Several Canadian operators outlined plans for increased spending for 1994.

Among them, Westcoast Energy set a capital program of $686 million, including $381 million to be spent in British Columbia to expand operating capacity.

It also includes outlays of $305 million in Ontario to increase capacity on the Union Gas transmission, distribution, and storage facilities and additions to the Centra Gas distribution system.

Petro Canada plans a capital program of $423 million, down from $464 million spent in 1993 but higher than the $348 outlay of 1992. About $160 million net of grants will be directed at Petro Canada's interest in the Hibernia field offshore development program, with another $95 million aimed at other projects.

Petro Canada's resources division spent $303 million last year, up from $252 million in 1992. Petro Canada plans to further increase capital outlays in western Canada this year if it can sell noncore assets.

Chieftain International set its 1994 capital budget at $100 million, with $35 million allocated to oil and gas exploration and development and $65 million for acquisition of producing leases. The budget is up from estimated total outlays of $31 million in 1993.

The acquisition portion of the budget is to be directed to the U.S., which will be the main focus of E&D spending.

Copyright 1994 Oil & Gas Journal. All Rights Reserved.

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