CALGARY – Oilsands giant Suncor Energy Inc. said Monday it has set a $7.3-billion capital spending budget for 2013 and that it plans to make a decision on whether to go ahead with its Voyageur upgrader early next year.
The 2013 spending plans mark a slight dip from the $7.5 billion Suncor (TSX:SU) had originally expected to spend in 2012, but an increase from its revised forecast of $6.65 billion announced along with its third-quarter results about a month ago.
“Our 2013 capital plan demonstrates our commitment to be absolutely diligent in pursuing those projects expected to provide profitable, long-term growth for shareholders,” said CEO Steve Williams.
“As a result of our disciplined and prudent spending in 2012, we will begin 2013 with a strong balance sheet and the ability to fund our capital program completely from internal cash flow.”
Suncor attributed the lower-than-expected 2012 spending to its new Firebag Stage 4 oilsands project, which came in 10 per cent under budget, as well as slowing the pace of some projects it is jointly developing alongside France’s Total SA.
One of those projects is the Voyageur upgrader, which would be used to transform tarry oilsands bitumen into a lighter oil refineries are capable of processing.
Williams has previously said that burgeoning U.S. oil growths in regions such as North Dakota is putting pressure on the economics of the multibillion-dollar upgrader, which has been shelved since late 2008.
“Together with our joint venture partner, we have accelerated the review of the Voyageur project with the intent to reach a decision by the end of the first quarter in 2013,” said Williams.
“Until a decision is made, we have agreed to minimize spending on this project.”
Suncor and Total are also reviewing the economic feasibility of their Fort Hills and Joslyn oilsands mines. Suncor has vowed to put cost and quality ahead of schedule ahead of those projects as a means to avoid the cost overruns that occurred during the last boom.
About $3.3 billion of next year’s budget is to go towards growth projects, while $4 billion is for sustaining capital to make sure existing operations run smoothly.
Total production next year is expected to be 570,000 to 620,000 barrels of oil equivalent per day, an increase from the 530,000 to 580,000 Suncor forecast at the end of 2011 for this year.
Suncor shares fell 14 cents to $32.32 Monday on the Toronto Stock Exchange.