Oilsands firm Canadian Natural cuts $1 billion from budget due to low oil price

Oilsands firm Canadian Natural cuts $1 billion from budget due to low oil price

CALGARY — Canadian Natural Resources Ltd. is cutting its 2019 capital budget by about $1 billion due to poor western Canadian oil prices but it says it will ramp up spending if prices rebound.

The Calgary-based oilsands producer announced Wednesday a 2019 base budget of $3.7 billion, below its ”normalized” range of $4.7 billion to $5 billion and about 20 per cent less than this year’s $4.6 billion.

“Our capital program is very flexible and we can curtail capital spending down to the $3.1 billion range and still keep production flat,” said president Tim McKay during a webcast from the company’s investor day in Toronto following the announcement.

“Should prices improve and stabilize, and we see clarity on market access, we would look to increase our capital to approximately $4.4 billion.”

A glut of oil in Alberta as pipeline capacity fails to match production increases is blamed for dramatically lower local oil prices since last fall.

Analysts praised the budget for its restraint in the current oil price environment and Canadian Natural shares closed up 4.2 per cent to $37.33 in Wednesday trading on the Toronto Stock Exchange.

The 2019 budget contains $600 million for long-term growth projects, including the completion of the 40,000-barrel-per-day steam-driven Kirby North oilsands project (expected to deliver first oil in late 2019) and building additional multi-well pads at Canadian Natural’s Primrose thermal heavy oil project in northern Alberta.

Production in 2019 is targeted to be between 1.03 million and 1.12 million barrels of oil equivalent per day, down slightly from this year’s expected output, with a product mix of about 76 per cent oil and natural gas liquids and 24 per cent dry natural gas.

A production curtailment program announced by the Alberta government last weekend designed to remove 325,000 barrels per day of oil from the province’s over-taxed pipelines has already resulted in stronger forward crude prices in January, Canadian Natural said.

It plans to monitor those prices and the progress of the stalled Keystone XL and Trans Mountain expansion export pipelines to determine if spending should be increased.

Technology and options to increase future oil production took centre stage at the investor day, with Scott Stauth, chief operating officer for oilsands, fleshing out Canadian Natural’s plan revealed last spring to test driverless oilsands mining trucks.

The autonomous haulers are already in place at rival Suncor Energy Inc.’s mines and Imperial Oil Ltd. said recently it plans to experiment with up to seven of the trucks at its Kearl mine.

Canadian Natural plans to spend about $75 million on a field trial at its Jackpine Mine in late 2020, Stauth said.

“Assuming we are satisfied with the results of the three-truck trial at Jackpine, we would convert all trucks at Jackpine to autonomous by 2022, followed by Muskeg River Mine and Horizon in 2025,” said Stauth.

“With an incremental capital cost of $275 million to $325 million, we target our operating costs to be reduced by 30 to 50 cents per barrel once complete.”

Canadian Natural has 18 trucks at Jackpine and a total of about 140 at all three mines.

The company is encouraged by results from its 500-tonne-per-hour pilot project to separate bitumen from sand in the mining pit using a portable processing unit, rather than transporting it to a central processing facility, and plans to continue to test it in 2019 before building a larger commercial-sized plant in 2020, Stauth said.

The technology could reduce mining costs by $2 to $3 per barrel, cut greenhouse gas emissions “significantly” through less trucking, and reduce the need for tailings ponds, he said.

Stauth said new phases at the company’s Horizon oilsands mining and upgrading facility and the proposed Pierre River oilsands project could add 510,000 bpd of synthetic oil production but would only be considered if market access issues are solved.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Dwayne Buckle, 40 of Red Deer finished a 1,638-kilometre walk, in honour of his family. The 12-week, 82 day-journey wrapped up in Port Hardy, B.C. on Monday. Facebook photo
Red Deer man completes 1,638 km hike for cancer research

Dwayne Buckle, a Red Deer firefighter returned home Friday after his 12-week journey

The Pfizer-BioNTech vaccine deliveres to Canada are being delayed because of complications at their European distribution facility. THE CANADIAN PRESS/Nathan Denette
Delays of Pfizer vaccine delivery to impact Alberta’s vaccination plans

Alberta has administered 74,000 doses of the COVID-19 vaccine so far

Two inmates at Bowden Institution have tested positive for COVID-19. (Black Press File Photo)
2 Bowden inmates test positive for COVID-19

A pair of inmates at Bowden Institution have tested positive for COVID-19.… Continue reading

Salons and barbershops are able to open on Monday, the Government of Alberta announced this week. (Photo courtesy Pixabay)
Red Deer salon owner “relieved” business can re-open next week

The owner of a Red Deer salon says she’s “definitely relieved” her… Continue reading

Red Deer Valhalla Pure Outfitters owner Darren Schaedeli has seen a significant increase in those looking to tackle winter experiences. Some are trying their hand at "hot tent camping" as he did in the West Country several weeks ago.
Photo contributed
Central Albertans enjoying the great outdoors this winter

Stir crazy and beach-deprived central Albertans are embracing the great outdoors this… Continue reading

Lesser Slave Lake UCP MLA Pat Rehn. (Facebook)
Updated: Jason Kenney kicks Lesser Slave Lake MLA out of caucus

Pat Rehn will not be permitted to run for UCP nominations

One way to get infloor heating is with electrical cables installed underneath ceramic tiles. Here DITRA-HEAT cables are snapped into an uncoupling underlay that goes down before tiles. (Photo by Robert Maxwell)
Houseworks: Heating a basement under renovation

Q: Will DITRA-HEAT electric infloor heating be enough to make my finished… Continue reading

Super Valu has experienced an increase in demand for products such as toilet paper as people prepare for the coronavirus. (Photo by SUSAN ZIELINSKI/Advocate staff)
Hints from Heloise: Stock your closet

Dear Heloise: If this year has taught me anything, toilet paper, wipes,… Continue reading

Manchester United's Tobin Heath celebrates scoring against West Ham United during the FA Women's Super League match at Victoria Road Stadium, London, Sunday Oct. 18, 2020. (John Walton/PA via AP)
Double 1st: Man U men, women leading 2 leagues, play champs

Double 1st: Man U men, women leading 2 leagues, play champs

A group of Buffalo Bills fans from Toronto pose for a photo while tailgating in the parking lot of New Era Field before an NFL football game between the Bills and the New York Jets, Sunday, Dec. 9, 2018, in Orchard Park, N.Y. THE CANADIAN PRESS/AP-Adrian Kraus
Being unable to attend Bills playoff games due to pandemic pains Canadian fans

Being unable to attend Bills playoff games due to pandemic pains Canadian fans

FILE - Chicago Cubs' Kris Bryant runs the bases after hitting a solo home run in the sixth inning during a baseball game against the Cleveland Indians in Cleveland, in this Wednesday, Aug. 12, 2020, file photo. Bryant is among roughly 125 players who entered Friday, Jan. 15, 2021, eligible to exchange salary arbitration figures with their teams. (AP Photo/Tony Dejak, File)
Lindor, Bryant, Bellinger, Seager get big-money deals

Lindor, Bryant, Bellinger, Seager get big-money deals

Brooklyn Nets coach Steve Nash points during the third quarter of the team's NBA basketball game against the New York Knicks on Wednesday, Jan. 13, 2021, in New York. (Brad Penner/Pool Photo via AP)
More NBA games off, as league continues struggles with virus

More NBA games off, as league continues struggles with virus

Washington Capitals' Jakub Vrana (13) is congratulated for his goal during the second period of the team's NHL hockey game against the Buffalo Sabres, Friday, Jan. 15, 2021, in Buffalo, N.Y. (AP Photo/Jeffrey T. Barnes)
Vanecek makes 28 saves in NHL debut, Capitals sweep Sabres

Vanecek makes 28 saves in NHL debut, Capitals sweep Sabres

Chicago Blackhawks goaltender Collin Delia (60) makes a save after Tampa Bay Lightning left wing Ondrej Palat (18) fell down during the first period of an NHL hockey game Friday, Jan. 15, 2021, in Tampa, Fla. (AP Photo/Chris O'Meara)
Stamkos, Palat lift Lightning over Blackhawks again

Stamkos, Palat lift Lightning over Blackhawks again

Most Read