Shaky economy hinders Long Lake oilsands project
By MARKUS ERMISCH, SUN MEDIA
10th December 2009
Nexen Inc. is delaying the expansion of its Long Lake oilsands project by one year to 2011, citing Canada's hesitant economic recovery and a lack of clarity about new environmental regulations as major reasons.
"Right across our industry, there is quite a measured approach to the pace of investment," Nexen CEO Marvin Romanow said in a conference call yesterday.
He said many companies are trying to manage their cash flow, which is money available to be plowed back into operations, relative to actual capital expenditures for the coming year.
Nexen plans to spend $2.5 billion on capital expansion next year, with $1.8 billion earmarked for conventional development and exploration.
About $400 million will be spent on oilsands operations, another $200 million is to be invested in shale gas developments and $100 million is for other corporate purposes.
Long Lake, a $6.1 billion project that integrates in-situ bitumen recovery with gasification and onsite upgrading, went online in October last year, just at about the time North America started sliding ever deeper into a recession.
Since then, Nexen and joint venture partner OPTI Canada have been ramping up operations somewhat slower than expected, but Romanow said yesterday "we're on the path to deliver the value that we expect over the next 40 years."
If oil prices average $70 a barrel and natural gas prices average $5.50 per thousand cubic feet, Nexen expects to fund its 2010 budget from the cash generated from operations.
http://www.edmontonsun.com/money/2009/12/10/12103081-sun.html
