CANADIANS SPENDING TO SLIDE 5.5%

Plans for capital and exploration spending by the Canadian petroleum industry show a drop of 5.5% to $9 billion for 1992.

Canadian spending edged up 2.8% to 59.5 billion last year. Spending in 1991 was scaled back substantially from what had been budgeted. Oil & Gas Journal's survey last year showed a planned 16.7% increase in total outlays.

Exploration and production spending will see the largest decline this year among industry segments, falling 6.3% to $6 billion. A survey by Salomon Bros. Inc., New York, produced similar results. Its survey of planned Canadian exploration and production spending showed a drop of 4.9% in 1992. Last year Canadian exploration and production outlays slipped only 0.2% to $6.4 billion.

OGJ projects a 4.7% decline to 5,297 in Canadian well completions this year (OGJ, Jan. 27, p. 66).

OTHER SEGMENTS

Canadian non-E&P spending also will fall in 1992, moving down 3.9% to $3 billion. In 1991 non-E&P spending advanced 9.2% to $3.2 billion.

Refining and marketing outlays will be down after rising sharply last year. Refining spending will fall 23.4% to $485 million, compared with an increase of 26.3% in 1991 to $633 million. Marketing outlays will be off 5.8% this year at $631 million, compared with an increase of 16.5% last year to $671 million,

Petrochemical capital spending will increase 2.2% to $326 million. Spending last year fell 3.3% to $319 million.

Canadian transportation spending plans call for an increase of 10.7% to $945 million. Total transportation spending moved up 8.9% in 1991 to $854 million. In both years the increase is due to a large gain in spending for gas pipeline construction.

Spending for gas pipelines will rise 13.9% to $899 million in 1992, accounting for 93.1% of total transportation spending. Last year outlays for gas pipelines moved up 10.7% to $789 million.

Canadian oil and gas industry capital spending on nonpetroleum activities will fall 4.8% in 1992 to $651 million. Last year spending outside of oil and gas fell 3% to $705 million.

COMPANY PLANS

Among companies disclosing their 1992 budgets, Home Oil Company Ltd. reduced its spending plans. It will spend about $100 million on capital projects in western Canada, including $25 million for exploration. It will concentrate on projects that will generate early cash flow. Home also intends to continue its program of selected asset disposal in 1992.

Co-enerco Resources Ltd., Calgary, plans to boost its spending 26% to $39.5 million. Drilling and recompletions will account for more than 50% of spending. It will participate in drilling 33 wells, 72% in on oil plays and 30% exploratory.

For the first time the company has separately. budgeted funds for environmental items such as abandonments, cleanups and site restorations.

Shell Canada Ltd. has a 1992 capital and exploration budget of $835 million, compared with $1 billion spent in 1991.

The 1992 plan includes $590 million for Shell's resources segment. Construction of the Caroline sour gas development project, north of Calgary, will require $265 million this year. Other resources activities include deliverability maintenance in major gas producing complexes, purchases of producing leases, and resumption of exploration on the Mackenzie Delta.

Shell will continue restructuring its oil and chemical products segment. The plan includes $225 million to support market restructuring plans with upgrading of facilities. Of that amount, $140 million will support retail and commercial markets, and $60 million will improve operating, environmental, and safety performance.

Amoco Canada Ltd. will cut capital and exploration spending to $338 million from an estimated $493 million in 1991. It blamed poor economics for the cut. Amoco made a commitment to the Canadian government to spend $2.5 billion during 5 years to obtain approval of its $5.5 billion takeover of Dome Petroleum Ltd. It will have spent $1.992 billion of that total at the end of 1992, based on its spending estimate.

Norcen Energy Resources Ltd. has a budget of $259 million, close to the estimated $262.2 million it spent in 1991. The 1992 budget allots $233 million to oil and gas programs and $26 million to propane marketing.

The plan includes $105 million for oil and gas exploration and $126 million for development programs.

Norcen's Canadian oil and gas division spending will move up 13.7% to $135 million from $118.7 million last year. Outlays planned for the U.S. will fall 6.2% to $66.5 million. Other international spending will slide to $33.7 million from $45.2 million in 1991.

The focus of Norcen's 1992 program will be on maintaining a brisk pace of development in western Canada and the U.S. with the emphasis on conventional oil prospects.

International spending plans include exploration, drilling in Indonesia and Malaysia and a seismic program in Algeria.