Suncor Energy Inc., which last month approved a new multi-billion-dollar oil sands mine, plans to spend more than $1-billion more in 2014 than it expects in 2013.
The company intends to spend $7.8-billion next year, compared with $6.7-billion in 2013, Suncor said late Wednesday afternoon. It expects production in the oil sands to grow by more than 14 per cent.
Suncor's Steve Williams has taken a measured approach to spending since taking over as chief executive officer in early 2012. The company has repeatedly trimmed budgets under his watch – with the most recent reduction announced in October. Next year's budget, however, is growing as Suncor chases growth projects and expects increased production from oil sands to offset declines elsewhere in the company.
Suncor will direct roughly $4.2-billion toward growth projects in 2014, the company said. By way of comparison, its original budget for 2013 called for $3.3-billion to be spent on growth projects. (Suncor's original 2013 budget, released last December, rang in at $7.3-billion. The company in October trimmed it to $6.7-billion thanks to deferring projects lower cost estimates from "scope optimization" in exploration and production).
The Calgary-based company said $1.9-billion of its growth budget will be spent on its Fort Hills joint venture, as well as "near-term debottlenecking and expansion" efforts at projects like MacKay River 2.
Suncor last month said it and its partners will proceed with the $13.5-billion Fort Hills mine. The decision came after years of delay.
Further "growth capital" has been tagged for exploration and production at its Golden Eagle project in the North Sea, and developing assets off Canada's East Coast, such as Hebron. The refining and marketing division will get about $220-million of the growth capital for projects supporting inland crude supply to Suncor's Montreal refinery.
"As evidenced by our debottlenecking initiatives and the recent Fort Hills project sanction, we will be diligent in pursuing only those projects we believe will deliver long-term shareholder value," Mr. Williams said in a statement. "This approach applies not only to how we view oil sands investments, but also to other opportunities in our rich suite of growth projects."
The remaining $3.6-billion slice of Suncor's 2014 budget will go toward "improving reliability across the company's assets, maintaining current production capacities through planned maintenance activities and ensuring the safety and efficiency of existing operations," it said.
Suncor also said it expects to produce an average of between 565,000 to 610,000 barrels of oil equivalent per day in 2014. Production from the oil sands – the company uses both mining and drilling techniques to extract bitumen from beneath the surface – will climb by 14 per cent, Suncor said. But because production from Suncor's North American onshore assets (excluding oil sands) is dropping, and it has sold natural gas assets, overall oil production will climb by about 10 per cent in 2014, the company said.
It expects its oil sands operating costs to ring in below $35 per barrel.
"With no major turnarounds planned in our oil sands business in 2014 and further debottlenecking opportunities, we're set for a strong year of continued production growth," Mr. Williams said.