Jim Letourneau's Blog

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Suncor Slowing Down

It would have been a shock if Suncor (TSX:SU, NYSE:SU) announced an increase in oil sands spending today. Suncor President, Rick George sums it up:

Following a thorough review in light of current financial market conditions, we've modified our capital plans for 2009, reducing targeted spending by more than a third.

Meanwhile, Petro China has announced that it will increase spending by 60-70% in 2009.

Interestingly enough, the US Department of Energy has been sending some love to the oil sands via a visit by Acting Deputy Secretary of Energy Jeffrey F. Kupferw. This was followed up with a handy dandy fact sheet on the role oil sands play in the North American energy picture.

Canada’s proven oil reserves total 179 billion barrels, of which 173 billion barrels are in oil sands reserves, making Canada second only to Saudi Arabia in global oil reserves.

It is almost as if the US DOE is trying to educate the next president on the realities of the North American energy market. It looks like the "dirty oil" will keep flowing south for a while.

China could be planning some oil sands buying. It will be interesting to see the reaction of the Canadian and US governments. Low oil prices, delayed oil sands projects, and a slowdown in drilling will lead to higher prices down the road.