Calgary-based Shell Canada on Thursday raised its capital investment plan for 2006 60%, to C$2.7 billion, with an eye toward increasing oil and natural gas production by more than 50% by the end of the decade. The budget earmarks C$2.4 billion for capital expenditures and another C$255 million on related exploration and pre-development expenses.

“With a strong balance sheet, excellent people and favorable economic prospects, Shell Canada is well positioned to grow,” said CEO Clive Mather. “We expect to start construction on our first Athabasca oil sands expansion project next year, and over the next five years anticipate that our total investment program could approach C$17 billion as we pursue this project and other growth opportunities.”

The 2006 investment plan for the exploration and production (E&P) business segment totals C$1.165 billion, about C$305 million of which will be invested in exploration and C$845 million in development opportunities. These expenditures include C$80 million of related exploration expenses and C$90 million of pre-development expenses for future growth projects.

About 45% of the E&P program is to maintain natural gas production levels in current areas of operation, C$410 million in the Foothills area of Western Canada and C$95 million at the Sable Offshore Gas Project.

The balance of the program is mainly focused on growth opportunities, including unconventional gas exploration in Western Canada, the proposed Mackenzie Gas Project in the far north, and the Peace River in-situ oil sands. Planned unconventional gas expenditures of about C$405 million in 2006 will focus primarily on exploration and development opportunities in basin-centered gas, including tests on a land parcel acquired in British Columbia this year.

The basin-centered gas program in 2006 also includes initial expenditures on a potential new gas plant in the area to handle anticipated production increases over the next five years. The Mackenzie Delta plan includes 2006 pre-development expenses of about C$45 million to advance the regulatory process, potentially leading to approval and project go-ahead in 2007 (see related story).

“Shell Canada’s recent performance has demonstrated the quality of its assets, people, operating systems and earnings, with all three business units making significant contributions to our bottom line,” said Mather. “The 2006 plan proposes a substantial increase in capital to take advantage of higher prices and a strong business outlook, and I’m confident of our ability to move the related opportunities forward to create incremental value for our shareholders.”

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