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Canada’s Arctic operators chop staff, spending Shell Canada, ConocoPhillips Canada, BP Canada and Petro-Canada wield budget knives, but leave Mackenzie Delta programs intact Gary Park PNA Canadian Correspondent
Several key players in the future Mackenzie Delta natural gas have taken the hatchet to some aspects of their operations without yet retreating from their Arctic programs.
In a rash of announcements, Shell Canada Ltd., ConocoPhillips Canada Ltd., BP Canada Energy Co. and Petro-Canada have set the stage for extensive layoffs or squeezed their capital budgets for 2003.
ConocoPhillips and Shell hold 35 percent and 10 percent respectively of the National Energy Board licenses to export gas from the Mackenzie Delta and Beaufort Sea, while BP and Petro-Canada are members of the seven-company Mackenzie Delta Explorers Group.
Cuts in Calgary head office ConocoPhillips said Nov. 27 that it was cutting 110 of the 900 job in its Calgary head office, but insisted the decision was unrelated to recent announcements that its parent company was planning a 25 percent cut in spending and an emphasis on reducing a $30 billion debt.
ConocoPhillips said its layoffs followed a long review of its Canadian operations, but would not affect any major projects now in the development stage, including the proposed Mackenzie Delta and Mackenzie Valley gas development, early work on the Surmont oil sands project in Alberta and exploration off the East Coast.
A spokesman said the reorganization was related more to the efficient running of its core business in Western Canada as well as the major frontier ventures.
ConocoPhillips acquired significant Arctic gas holdings, including an export license for 3.2 trillion cubic feet of Delta-Beaufort gas, in its blockbuster C$10 billion takeover of Gulf Canada Resources Ltd. last year.
A spokesman said the company remains hopeful that it can deliver to market through the proposed Mackenzie Valley pipeline, adding “we pleased with the progress that the producers’ group is making.”
Shell cuts related to oil sands Shell, 78 percent owned by the Royal Dutch/Shell Group, said that its Canadian capital spending would be slashed in 2003 to C$810 million from C$1.8 billion this year.
The cut is due almost entirely to the completion of the C$5.7 billion Athabasca Oil Sands Project, which is 60 percent owned by Shell and is scheduled to come on stream in the first quarter of 2003 at 155,000 barrels per day.
“The priority for us is to get this new business sector fully up and operational ... at its cruising speed,” said Shell president and chief executive officer Tim Faithfull.
He said Athabasca, despite coming in 33 percent over budget, will also provide a foundation for future oil sands expansions, which could ultimately attain 500,000 barrels per day.
Otherwise, Shell Canada is sticking with a five-year program to spend $1.2 billion advancing opportunities East Coast offshore and Mackenzie Delta “subject to obtaining necessary approvals for related developments and investments.”
More head office, oil sands cuts BP Canada, which produces 750 million per day of gas in Canada, said Nov. 29 it plans to eliminate 50 of its 250 head office staff in Calgary as it strives to reduce overhead and keep costs down.
An undetermined number of additional layoffs are expected among 250 employees in field operations, all in line with BP’s worldwide campaign to reduce unit costs in the wake of lower-than-anticipated production.
Petro-Canada said Nov. 29 it is poised to slash C$415 million from its oil sands budget next year unless the costs of complying with the Kyoto Protocol are set out in detail by the Canadian government, which still owns 20 percent of Petro-Canada.
If it delivers on its threat, it will be the heaviest blow yet to the oil sands, considered the most vulnerable sector of the petroleum industry to pay the price of Kyoto implementation.
Wilf Gobert, an analyst with Peters & Co., a Calgary investment dealer, said the warning underscores Petro-Canada’s ability to divert spending from Canada to its overseas operations since its takeover earlier this year of Germany’s Veba Oil & Gas for C$3.2 billion.
In fact, Petro-Canada’s spending in 2003 is expected to grow by 25 percent to C$2.58 billion propelled by its new international activities.
The company said spending on its Western Canadian natural gas operations will drop by 11 percent to C$455 million, but will include at least one Mackenzie Delta well in partnership with Devon Canada Corp.
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