Suncor to spend C$5.5 billion, boost oil sands output

By Scott Haggett

CALGARY, Alberta (Reuters) - Suncor Energy Inc (SU.TO: Quote), Canada's biggest oil company, said on Friday it has earmarked C$5.5 billion ($5.23 billion) for capital expenditures next year and will restart projects the economic crisis had forced it to suspend.

Suncor, which dominates Canada's oil sands region following its C$22.7 billion acquisition of Petro-Canada in August, is targeting an additional 136,000 barrels per day of production from its holdings there by the end of 2012 as it completes stages 3 and 4 of the recession-delayed Firebag thermal project.

Outlining his development priorities for the first time since completing the Petro-Canada takeover, Chief Executive Rick George said Suncor will concentrate on boosting output from its massive oil sands holdings, containing as much as 22 billion barrels of tar-like bitumen.

"Suncor will continue to be dominated by oil sands," he said on a conference call. "That's where our reserves are."

George said Suncor aims to grow oil sands production, targeted at 300,000 barrels per day this year, by 10 percent to 12 percent annually through 2020.

Both Suncor and Petro-Canada halted major oil sands projects last year as the economic crisis caused commodity prices to plunge and made credit scarce and expensive.

However, with oil prices and economies recovering, George said Suncor's northern Alberta operations could again be profitable, generating a 15 percent return when oil sells for $70 a barrel.

FORT HILLS WAITS