Shell Canada said Thursday that it will boost its capital and exploration spending next year by 60% to $1.8 billion compared to 2004 levels. CEO Clive Mather said increases would be made in both upstream and downstream spending to take advantage of growth opportunities.
“While profitability of our existing businesses remains a priority, we will be putting more emphasis on our strong and diverse portfolio of growth opportunities over the next several years,” said Mather. “Our 2005 investment plan includes increased levels of expenditure to advance growth opportunities in our upstream businesses and to bolster our downstream marketing network.”
The 2005 spending plans for the exploration and production includes $220 million for exploration and $560 million for development projects. About 60% of the program is focused on maintaining natural gas production levels in current areas of operation, including $335 million in the Foothills area of Western Canada and approximately $150 million for the Sable Offshore Energy Project offshore Nova Scotia.
The balance of the 2005 E&P program is related to growth opportunities, including unconventional gas and Peace River in-situ oil sands in Western Canada and the Mackenzie Gas Project in the Northwest Territories. The unconventional gas program includes additional test wells to further advance and assess tight gas and coalbed methane opportunities in British Columbia and Alberta. The Peace River program includes additional wells to increase bitumen production to the current license capacity of 12,000 bbl/d and engineering and technical work for a potential 30,000 bbl/d expansion project. Construction on the Peace River expansion project could start in 2007.
“All three business units, including oil sands, are now making significant contributions to our bottom line, giving us increased financial capacity to pursue growth initiatives,” said Mather. “People are critical to our success and I’m confident that we can develop sufficient skills and capacity in our organization to move these opportunities forward and create incremental value for our shareholders.”
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