Update: Canadian Oil Sands expects capital spending before 2020 Syncrude expansion

Canadian Oil Sands Ltd expects some capital spending this decade in advance of the next big Syncrude Canada expansion even though the project’s startup has been pushed back into the early 2020s, chief executive Marcel Coutu said on Thursday.

The partners will likely begin some engineering and construction on Syncrude’s Aurora South oilsands mine before the end of the decade, Coutu said during a conference call to discuss the company’s 2012 budget. The Syncrude partners have postponed major expansion at Syncrude to concentrate on reliability of existing assets.

Canadian Oil Sands, which has a 37 per cent stake in Syncrude development near Fort McMurray, Alberta, expects production of 106 million to 117 million barrels from the project in 2012, up from an estimated output of 105 million to 107 million barrels for this year.

The company had expected to increase production from Syncrude, one of the two largest Canadian oilsands developments, by 71 per cent by 2020. Capacity is currently about 350,000 barrel per day (bpd).

In November, Syncrude Canada suffered an outage of one of its coker units, reducing output by 100,000 bpd. That was on top of unplanned maintenance on another piece of equipment that was expected to be completed by the end of this year.

Canadian Oil Sands expects to spend C$1.46 billion on the project next year, up from its 2011 estimate of C$691 million.

The company said about C$974 million will be spent on major infrastructure projects that should position Syncrude for 10-20 years of production.

Canadian Oil Sands expects sales to total C$3.68 billion, based on a WTI crude oil price assumption of $85 per barrel. In 2011, the company was expecting sales of C$4.0 billion, based on crude oil prices of $92 per barrel.

Syncrude’s other partners are Imperial Oil Ltd, Suncor Energy Inc, Nexen Inc, Sinopec, JX Holdings unit Mocal Energy and Murphy Oil Corp.

Imperial Oil Ltd, the second-largest interest holder with 25 per cent, said last month it aims to focus on reliability while holding off on capacity additions until the end of the decade. Major capital projects must be approved by all of the partners.

Canadian Oil Sands said it plans to maintain its current quarterly dividend of 30 Canadian cents per share during 2012.

Canadian Oil Sands shares were down 30 Canadian cents at C$20.05 in Thursday morning trading on the Toronto Stock Exchange.