Posted on 04/27/2011 5:32:28 AM PDT by thackney
Fast-growing oilsands company Cenovus Energy Inc. has won provincial approval for an estimated $2.7-billion expansion of its Christina Lake thermal operations.
The company, split off from Encana Corp. two years ago, announced Tuesday it has an Energy Resources Conservation Board endorsement to move forward with three expansion phases of 40,000 bpd each to bring gross production capacity to 218,000 bpd.
At an average capital intensity of about $22,500 per flowing barrel, the 120,000-bpd Christina Lake expansion would cost about $2.7 billion.
The steam-assisted gravity drainage project is now producing about 18,000 bpd but had approvals to expand to 98,000 bpd.
It and neighbouring Foster Creek, with capacity of 120,000 bpd, along with two heavy oil refineries in the United States, are 50-50 projects with U.S.-based ConocoPhillips.
The regulatory approval at Christina Lake is a significant step in our plan to increase the companys net asset value, said president and chief executive Brian Ferguson in a news release.
This is a major milestone that allows our expansion plans at Christina Lake to remain on schedule.
Cenovus plans to grow oilsands production five-fold by 2019. With the approval, it has oilsands expansions totalling 290,000 bpd of gross production capacity either under construction or approved, in addition to its current combined capacity of 138,000 bpd at Christina Lake and Foster Creek.
We are especially proud of our ability to deliver industry-leading capital efficiencies as we expand our oilsands projects, said John Brannan, executive vice-president and chief operating officer of Cenovus.
We are currently building our Christina Lake expansions at a capital efficiency of about $22,500 per flowing barrel. This is largely thanks to our manufacturing approach for constructing expansions and the improvements our staff are able to identify and implement with each new phase.
Engineering and equipment fabrication for what is being called Christina Lake Phase E is already underway with first production planned for 2014. Phase F is expected to begin production in 2016 and Phase G the following year.
Phase E is expected to be sanctioned by Cenovus and its partner by the end of 2011.
Both Cenovus projects reported record production and industry-leading steam-oil ratios in February, according to a recent ranking of in situ projects from Calgary investment bank Peters & Co.
Foster Creeks output of 117,400 bpd in February makes it the largest project in Alberta.
Christina Lake produced 17,400 bpd and had the lowest current steam-oil ratio at 1.7, meaning it took 1.7 barrels of steam to produce one barrel of bitumen. Its cumulative SOR is 2.2.
An example of the capital investment required to increase production at an existing facility with the infrastructure already in place.
If a company makes 10% profit on $100 oil, it would 2,250 days or 6 years and 2 months to break even.
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