In this October 25, 2009 file photo, workers leave the Suncor oil sands extraction facility near the town of Fort McMurray in Alberta.MARK RALSTON/AFP / Getty Images
Suncor Energy Inc. is jacking up spending on major growth projects in the oil sands even as weak crude prices crimp profits and prompt competitors to rethink big-ticket expansions in the sector.
The Calgary-based company late on Tuesday said it would spend between $6.7-billion and $7.3-billion next year, up from $5.8-billion to $6.4-billion in expenditures planned this year. It also cut its 2016 production outlook to between 525,000 to 565,000 barrels of oil-equivalent per day, down from 550,000 to 595,000 oil-equivalent barrels it expects to pump this year.
Suncor said output would be lower due to "significant" maintenance planned at one of its upgrading operations as well as at its steam-driven Firebag development.
About 55 per cent of next year's outlay is earmarked for growth projects, including the massive $15-billion Fort Hills mine under construction north of Fort McMurray, Alta. The rest is set aside for sustaining capital, it said.
The spending blueprint contrasts with other energy companies that are dialing back growth plans and slashing budgets to cope with the collapse in commodity prices. U.S. oil prices on Tuesday shed 2.6 per cent to close at $40.67 (U.S.) a barrel on continued oversupply fears.
Earlier this month, oil sands producer Canadian Natural Resources Ltd. said it tentatively plans to spend between $4.5-billion (Canadian) to $5-billion next year, and that it could cut that amount by as much as $1.5-billion depending on commodity markets.
Suncor has so far chopped $1.4-billion from its budget this year and let go about 1,200 employees. It said Tuesday it could adjust next year's spending plan in line with "any further deterioration in market conditions," citing potential reductions in capital and operating expenditures.
In October, Suncor launched a $4.7-billion hostile takeover bid for Canadian Oil Sands Ltd., its partner and the largest shareholder in the Syncrude Canada Ltd. consortium.
Excluding its share of the Syncrude project, it projects cash operating costs per barrel in the oil sands next year of between $27 and $30 a barrel. That compares to estimated cash operating costs at the Syncrude project of $38 to $45 a barrel, the company said. Suncor owns 12 per cent of Syncrude.