Canadian Refiners Increase Planned Future Spending by 350% During Last Twelve Months

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Researched by Industrial Info Resources (Sugar Land, Texas). The Canadian refining industry has always had robust capital and maintenance spending. On average, $8-10 billion in proposed refining expenditures are on the books during any given year in the country, but recent highs in oil prices have given way to a flurry of planning activity among Canada’s refiners for expansions and new upgrading units. At the beginning of 2005, Industrialinfo.com was tracking over 100 projects worth just under $10 billion in proposed future expenditures within the Refining industry in Canada. Within the last twelve months, however, those numbers have skyrocketed. Currently, Industrialinfo.com is tracking almost 160 projects worth $44.7 billion that are planned for the future within the industry.

Click on the image at right to view a chart showing the 2005 vs. 2006 Canada Refining Industry Comparison Chart.

With the exception of Ontario, where planned spending has actually decreased by 3.6% ($736 million now versus $764 million a year ago), the Refining industry is experiencing incredible growth across the board in Canada. In Western Canada alone, planned future expenditures are up by 399% over those expenditures planned at the beginning of 2005, $42.3 billion now versus $8.3 billion at the same time last year. Similar increases, although not quite as large, are being experienced in both Atlantic Canada, 85.7% or $1.1 billion versus $611 million, and Quebec (297% or $483 million versus $121 million).

In Atlantic Canada and Quebec, the expenditure increases are being driven by a half dozen projects, three in each region. A $200 million delayed coker unit addition, a $120 million distillate hydrotreater unit addition, and a $50 million diesel/kerosene hydrotreater debottleneck are the driving force behind Atlantic Canada’s increases, while in Quebec a $150 million residual cat cracker unit (RCCU) addition, a $150 million delayed coker unit addition and a $90 million sulfur recovery unit (SRU) # 2 addition are responsible for the regions increase in expenditures.

In Western Canada, companies such as Total SA (NYSE:TOT) (Johannesburg, South Africa), Suncor Energy, Incorporated (NYSE:SU) (Calgary, Alberta Canada), MEG Energy Corporation (Calgary, Alberta Canada), Petro-Canada, Incorporated (NYSE:PCZ) (Calgary, Alberta Canada) , Shell Canada, Limited(Toronto:SHC.TO) (Calgary, Alberta Canada), Canadian Natural Resources Limited (NYSE:CNQ) (Calgary, Alberta Canada), and Syncrude Canada, Limited (Calgary, Alberta Canada) are all planning to add new bitumen/oil sands upgraders to their holdings in Alberta, each upgrader costing $2.5 billion to $4.3 billion to construct. Each of these projects is scheduled to begin construction between the beginning of 2007 and the end of 2009.

With oil prices reaching record highs, and even more impressively staying there, the Canadian refiners are pulling out all the stops to take advantage of the situation. Numerous oil sands projects are moving forward at incredibly rapid rates as companies try to get their expansions in place and units operational, while the industry is riding this wave. Eventually, this spending flurry will die down, but for the next 3-5 years, Canadian refiners will be opening their coffers wide to hopefully maintain this high within the industry.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.