Oil sands workers are hoping to get lumps of bitumen in their Christmas stockings this year, after two of Alberta’s largest heavyweights opened up the spending taps on Thursday.That’s because Calgary-based CNRL and Cenovus each announced capital budgets that could add more than $1 billion to oil patch coffers in 2024.Canadian Natural says it will spend about $5.4 billion next year — about $200 million higher than 2023 — and increase production by about 40,000 barrels to 1.5 million barrels per day or nearly a third of Canada’s oil and gas production..Likewise, Cenovus is targeting a range of $4.5 to $5 billion or as much as $1 billion more than its $4 to $5 billion target for this year.More significantly for the thermal bitumen producer, it aims to increase the throughput at its US refineries by 17% to as much as 670,000 barrels per day or enough to process virtually its entire slate of oil sands production. That is equally important, because it allows the company to take advantage of Canadian heavy oil discounts and capture almost all of the value of the barrel even though maintenance turnarounds — particularly at its Lloydminster Bi-Provincial upgrader will result in temporarily higher operating costs in the order of $20 per barrel.“We will continue to progress strategic initiatives in our base business in 2024 that will enhance our integrated operations and further drive our ability to grow total shareholder returns, even in periods of price volatility,” said CEO Jon McKenzie..“We will remain focused on reducing costs and continued capital discipline, while realizing the full value of our integrated strategy.”Both are back-stop shippers on the Trans Mountain pipeline, which is expected to shrink Canadian oil discounts when it comes on stream sometime — to be determined in the face of further, albeit smaller delays — in 2024.In a news release, CNRL boss Tim McKay said his company is looking to maintain its 24-year track record of annual dividend increases. A portion of the budget will go to debottlenecking the Scotford upgrader near Edmonton — which processes lower value bitumen into premium synthetic crude — and add another 5,600 barrels per day to its bottom line.According to Stifel Canada analyst Mike Dunn the production additions are coming at a slightly higher cost offset by positive developments at Scotford, but he remained upbeat in a research note despite what he expects to be “modestly” lower share performance following the news.According to Statistics Canada, Canadian oil and gas producers spent about $37 billion in 2022, with about $11.9 billion of the total in oil sands. Those are dollars that go directly to service companies, workers and ultimately governments.
