By Nia Williams
CALGARY, Alberta, Nov 17 (Reuters) - Canada's largest oil
and gas producer Suncor Energy Inc SU.TO said on Tuesday 2016
capital spending will increase by around 15 percent from this
year but production will drop slightly as a result of major
turnarounds on oil sands facilities.
Total production is expected to average 525,000 to 565,000
barrels of oil equivalent per day, with the midpoint down 5
percent from the 2015 average of 550,000 to 595,000 boepd.
Suncor Chief Executive Steve Williams said "significant
planned maintenance activities" at various facilities were
behind the cut, including the company's first five-year
turnaround at one of its two oil sands upgraders in northern
Alberta as well as maintenance at its Firebag thermal project.
A spokeswoman for Suncor said the reduced production had
nothing to do with low global oil prices, which have pushed the
price of Canadian heavy crude to around $27 a barrel
this month.
Canada holds the world's third-largest crude reserves and is
the biggest exporter of crude to the United States, but
Alberta's oil sands carry some of the highest operating costs
globally because of energy-intensive production methods.
At current prices, some oil sands producers are struggling
to cover the cost of production, blending and transportation but
are reluctant to curb output given the billions of dollars
already sunk into projects.
Along with its peers, Suncor has aggressively cut spending
and slashed jobs this year in response to low prices, and said
oil sands cash operating costs would be C$27-C$30 a barrel in
2016, down from C$28-C$31 a barrel.
The company will spend C$6.7 billion-C$7.3 billion in 2016,
up from C$5.8 billion-C$6.4 billion currently. On an earnings
call last month Williams said some of that spending will be
related to developing the Fort Hills project, which Suncor
bought an extra 10 percent stake in earlier this year, as well
as the turnarounds.
Projected 2016 spending is still below the C$7.2
billion-C$7.8 billion Suncor originally planned for 2015.
"We remain focused on achieving further reliability
improvements across our operations. And, we'll continue to build
upon the momentum gained in 2015 in reducing cash costs per
barrel at our oil sands operations," Williams said.
(Editing by Christian Plumb)