CALGARY, Alberta, Nov 17 (Reuters) - Canada's largest oil and gas producer Suncor Energy Inc said on Tuesday 2016 capital spending will increase by around 15 percent from this year but production will drop slightly as a result of major turnarounds on oil sands facilities.
Total production is expected to average 525,000 to 565,000 barrels of oil equivalent per day, with the midpoint down 5 percent from the 2015 average of 550,000 to 595,000 boepd.
Suncor Chief Executive Steve Williams said "significant planned maintenance activities" at various facilities were behind the cut, including the company's first five-year turnaround at one of its two oil sands upgraders in northern Alberta as well as maintenance at its Firebag thermal project.
A spokeswoman for Suncor said the reduced production had nothing to do with low global oil prices, which have pushed the price of Canadian heavy crude to around $27 a barrel this month.
Canada holds the world's third-largest crude reserves and is the biggest exporter of crude to the United States, but Alberta's oil sands carry some of the highest operating costs globally because of energy-intensive production methods.
At current prices, some oil sands producers are struggling to cover the cost of production, blending and transportation but are reluctant to curb output given the billions of dollars already sunk into projects.
Along with its peers, Suncor has aggressively cut spending and slashed jobs this year in response to low prices, and said oil sands cash operating costs would be C$27-C$30 a barrel in 2016, down from C$28-C$31 a barrel.
The company will spend C$6.7 billion-C$7.3 billion in 2016, up from C$5.8 billion-C$6.4 billion currently. On an earnings call last month Williams said some of that spending will be related to developing the Fort Hills project, which Suncor bought an extra 10 percent stake in earlier this year, as well as the turnarounds.
Projected 2016 spending is still below the C$7.2 billion-C$7.8 billion Suncor originally planned for 2015.
"We remain focused on achieving further reliability improvements across our operations. And, we'll continue to build upon the momentum gained in 2015 in reducing cash costs per barrel at our oil sands operations," Williams said.
Editing by Christian Plumb