ConocoPhillips has approved a 2011 capital program of US$13.5 billion, representing a significant increase in Exploration and Production (E&P) segment expenditures. Almost 90 percent of the capital program will be in support of E&P, while the Refining and Marketing (R&M) segment represents about 9 percent of this year’s spending. The skew towards greater upstream oil and gas activities is explained by a desire to reinforce higher returning investments, according to the company leadership.
“This year’s capital budget reflects our emphasis on building the upstream business,” said Jim Mulva, chairman and chief executive officer. “We expect competitive returns from our increased investments in North American and Australian unconventional resource projects. In addition, we are pursuing organic reserve and production growth by converting our existing resource base to proven reserves, participating in high-impact exploration wells and building acreage positions for future development.”
“We look forward to discussing our 2011 capital, operating and financial plans in greater detail when we meet with the financial community in March,” added Mulva.
Last year the company quite drammatically cut its interests in the Middle East, bailing out on the giant Shah Sour Gas Development Project, which it was in partnership with Abu Dhabi’s ADNOC in March. That project has since been awarded to Occidental Petroleum. In April last year Conoco withdrew from the Yanbu export refinery project with Saudi Aramco, a project estimated to worth around $10 billion.Â
Exploration and Production
The 2011 capital program for E&P is approximately $12.0 billion. This program also includes about $1.7 billion for worldwide exploration.
In North America, the capital program is expected to total approximately $6.0 billion. Spending in North America is increased, compared with prior years, with emphasis on liquids-rich resource plays and highest-return investments.
Spending in Canada will focus on existing SAGD oil sands projects and selective programs in the Western Canada gas basins, primarily on high-graded resource plays and on maintaining a substantial position for future development. In Europe, Asia Pacific and Africa, the E&P capital program is expected to total about $6.0 billion.
Within the Asia Pacific region, funds will be used for further development of the coalbed methane-to-LNG project associated with the Australia Pacific LNG joint venture, as well as for the development of new fields offshore Malaysia, Indonesia, and offshore Vietnam.
The company’s statement to the media said that capital for the Africa region is expected to be in support of onshore developments in Nigeria, Algeria and Libya. Spending in the Caspian Sea region is planned to be in support of continued development of the Kashagan Field.
The company will continue its focus on accessing, testing and appraising material opportunities in both conventional and non-conventional oil and gas plays. Exploration plans further appraisal of the Browse Basin Poseidon discovery and the Tiber and Shenandoah discoveries in the Gulf of Mexico. The company also plans to test material prospects in the Gulf of Mexico, Kazakhstan and the North Sea.Â
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