Suncor Energy Inc. announced that its Board of Directors has approved the company's C$7.5 billion capital spending plans for 2008. Of this total, approximately $6 billion, or about 80% of the total capital budget, is expected to be targeted to growth, primarily oil sands projects. Approximately $1.5 billion is planned for sustaining existing operations company-wide.
"This year marks a major ramp-up of capital spending directed toward our goal of producing more than half a million barrels of oil per day," said Rick George, president and CEO. "As we increase growth spending, we're also targeting a substantial increase to sustaining capital to help ensure our operations are running safely and reliably and contributing to a strong financial foundation over the coming years."
Suncor's growth capital budget is aimed at supporting the planned expansion of in-situ bitumen production and the construction of a third upgrader as part of the company's plans to increase oil sands production capacity to 550,000 barrels per day (bpd) in 2012. The balance of growth spending is planned primarily for completion of the expansion of production capacity to 350,000 bpd in 2008. The growth budget also includes about $275 million to be spent in Suncor's natural gas business to support the company's targeted production of 205 to 215 million cubic feet equivalent per day in 2008.
Of the planned $1.5 billion in sustaining capital, approximately $1.2 billion is targeted for Suncor's oil sands operation, including construction of the North Steepbank mine extension (which is expected to replace bitumen from mined-out areas), a planned maintenance shutdown of Upgrader 1 in the second quarter, and various projects intended to improve the reliability and productivity of oil sands assets. Investments in emission control equipment are also slated for 2008.
In Suncor's downstream operations, plans call for sustaining capital of approximately $225 million to be spent in 2008, aimed at maintaining safe and reliable operations following major growth projects at both the Sarnia, Ontario refinery and the Commerce City, Colorado refinery during the past two years.
Suncor expects similar levels of company-wide capital spending over the next several years. However, some projects, including components of Suncor's planned in-situ expansion, are subject to regulatory approval and the outcome may impact project details and related budgets.
Suncor's capital spending plan is expected to be financed through cash flow from operations, credit facilities and access to debt capital markets.
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