Oilsands deve lopers
Players in the oilsands are cutting back capital spending plans for 2015 while stressing they have the flexibility to revise those plans if necessary.
“The recent volatility in world oil prices is creating a challenging environment in which to set plans for 2015,” Brian Ferguson, president and CEO of in situ producer Cenovus Energy, told a conference call Thursday. “It is the kind of price environment that demands flexibility and financial resilience.”
Cenovus expects to see continued volatility in oil prices through 2015 which it will manage by exercising “capital discipline,” Ferguson said. Capital spending will be cut by about 15 per cent to between $2.5 billion and $2.7 billion.
Cenovus said it doesn’t plan layoffs but won’t increase its workforce. It will also slow development plans at Narrows Lake, its third oilsands project.
Andrew Leach, Enbridge professor of energy policy at the University of Alberta, said another growing concern is the slide in prices on the long-term oil futures market.
“I don’t think we’re at a point yet where it’s making sense for anybody to significantly delay or cancel projects that are already well into construction,” Leach said. “But in terms of the projects that we were expecting to see go into construction this year or next year, to be producing oil closer to the end of the decade, those are the ones where people might say, ‘Hmm, maybe I want to hang around and wait a little bit and see how things shake out on the oil-price side.’ ”
A provincial outlook report from RBC Economics released Friday said, “we expect the ramping up of production at new and expanded oilsands projects will continue to boost nonconventional oil output in the province despite a lower price environment.”
But it expects lower prices will curtail capital spending in the sector in 2015.