Capital and exploration spending plans by the Canadian petroleum industry show an increase of 6.7% to $9.7 billion (U.S.) for 1995.
Last year, Canadian capital spending moved up 17.8% to $9.03 billion from $7.66 billion spent in 1993.
The significant advance last year was due mainly to increased exploration and production spending. Canadian gas production has moved up significantly to support increased exports to U.S. markets. Canadian oil production also has risen.
E&P spending will post another increase in 1995. Planned E&P outlays are up 6.7% to $6.51 billion. This follows a sharp gain of 22.8% in 1994, when spending moved up to $6.1 billion from $4.97 billion in 1993.
Oil & Gas Journal has forecast a slight increase-1.6%-in Canadian well completions this year to 11,757 (OGJ, Jan. 30, p. 74).
A survey by Salomon Bros., New York, also shows a modest increase in planned Canadian F&P spending. Its survey of 111 companies showed Canadian exploration and production outlays increasing 1.9% in 1995.
Canadian downstream spending also will increase in 1995, moving up 8.8% to $3.18 billion. In 1994, such spending moved up 8.5% to $2.93 billion.
As in the U.S., there have been large swings in pipeline construction spending during the past few years, and these have had a major effect on the level of downstream spending.
Refining and marketing outlays are expected to increase in 1995. Canadian refining spending will be up 21% at $617 million. This follows a 15.6% increase last year to $510 million.
Marketing outlays will advance 10.9% in 1995 to $508 million, compared with a drop of 23.9% in 1994 to $458 million.
Petrochemical capital spending will slip 2.7% to $320 million. Spending last year was $329 million, down 8.6% from 1993.
Some of the greatest changes will be in spending for pipeline construction. Canadian transportation spending plans call for an increase of only 1.2% in 1995 to $1.18 billion. Total transportation spending was $1.17 billion in 1994, up 48.7% from 1993.
In 1995, spending for crude oil and petroleum product pipelines will fall to $158 million from $208 million in 1994. Such spending was only $29 million in 1993.
Outlays for natural gas pipelines will move up to $896 million from $815 million in 1994. In 1993, natural gas pipeline spending in Canada was $635 million.
The number of miles of natural gas pipeline to be laid in Canada this year is planned at 1,638 miles (OGJ, Feb. 6, p. 23). This is up from 1,326 miles planned for 1994.
Crude and product pipeline mileage planned fell to 372 miles in 1995 from 467 miles planned for 1994.
Spending on all other types of transportation will fall to $127 million in 1995 from $144 million in 1994.
Canadian oil and gas industry capital spending on nonpetroleum projects will increase 21.3% in 1995 to $559 million. Last year's nonpetroleum outlays fell 18.4% to $461 million.
COMPANY PLANS
Chieftain International set its 1995 capital budget at $95 million, with $35 million earmarked for oil and gas exploration and development and $60 million for acquisition of producing leases. The budget is up substantially from estimated total spending of $30.5 million in 1994.
Chieftain's E&D budget includes a substantial allocation for development in the U.S. and North Sea. Acquisitions will focus on the U.S. Chieftain said today's weak natural gas prices will increase the number of producing leases for sale.
PetroCanada's board approved a 1995 budget that includes spending of $900 million for property, plant, and equipment and exploration.
About $230 million, net of grants, will fund PetroCanada's 25% share of spending for development of Hibernia oil field off eastern Canada. About $340 million will go to other conventional oil and gas E&D programs and acquisitions in western Canada. About $180 million will enhance refinery reliability and efficiency and further upgrade the company's marketing network, while about $45 million will be spent for lubricants expansion.
Suncor plans a $107 million spending program for 1995. Outlays for conventional oil and gas E&D will match 1994's level. It plans to increase conventional oil and gas production by 17% in 1995 and expand oilsands operations at Fort McMurray, Alta.
Syncrude Canada plans to invest $715 million during the next 5 years at its Fort McMurray oilsands operation and an additional $715 million by 2004. Syncrude plans to raise its synthetic crude production to 220,000 b/d by 2004 from 194,500 b/d in 1994.
Canadian 88 plans a 1995 capital program of $24 million. The program, to be funded out of cash flow, will focus on natural gas development and recent oil discoveries at Virgin Hills, Three Hills, and Taber, Alta. The company plans to drill about 30 wells in western Canada during 1995 with expenditures split evenly between exploration and development locations.
In addition, the company plans to spend about 20% of its capital budget to further increase its undeveloped leasehold inventory, which has increased from 50,000 net acres to the current 165,000 net acres in the past year.
Canadian 88 Pres. Greg Noval said, "During 1995 oil and gas producers should be able to expect a bigger bang for their buck, given lower land and service costs that will result from depressed natural gas prices."
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