Suncor Energy Allocates $5.3 Billion to Oil Sands Projects in 2009

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Researched by Industrial Info Resources (Sugar Land, Texas)--On October 23, Suncor Energy (NYSE:SU) (Calgary, Alberta) announced its capital spending plan for 2009. The $6 billion plan cuts planned spending by more than one-third for the year. The company has allocated approximately $3.6 billion to its Voyageur upgrader project, although the scaled-down spending will delay completion of the project by about one year.

The company is currently under way with stages 3 and 4 of construction of its Firebag in-situ bitumen production and processing plant. This construction will carry on as scheduled in order to increase bitumen production and subsequent cashflow. Stages 5 and 6 of the construction, which were slated to start in 2010 and 2011, could possibly be delayed. President and CEO Rick George said, "We remain committed to an integrated expansion strategy and targeted oil sands production of 550,000 barrels per day. However, we've always had options available to us in terms of how the expansion is rolled out, and we believe in the current economic environment it's prudent to exercise that flexibility." Stages 3, 4, 5 and 6 of the Firebag expansion each have estimated total investment values of $600 million. "Given the current situation in the financial markets, what we're doing is really announcing a change in how we're going to execute this project. We're not mothballing it, we're not stopping it," said George.

In addition to the Voyageur upgrader, the company has allocated $1.7 billion for other oil sands operations. About $700 million will be spent toward Suncor's natural gas operations, with $300 million going toward exploration and production and $400 million allocated for planned maintenance and environmental improvements.

"Our aim is to ensure we are living within our means during a time of market uncertainty, while also making the strategic spending decisions that will allow us to continue our growth path," said George. Suncor expects to follow similar spending patterns through 2012.

Industrial Info is currently tracking $11.15 billion of active or planned Suncor projects involving oil sands.

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