Husky Energy says it has started production at its Dee Valley thermal project in Saskatchewan. It’s the second of six 10,000-barrel-per-day thermal bitumen projects to be brought on stream from 2018 to 2022.
“Dee Valley is the latest in our deep portfolio of repeatable, small-scale Lloyd developments that provide low-cost, reliable feedstock for our upgrader, asphalt refinery and U.S. refineries,” said CEO Rob Peabody, in a news release. “These projects have direct access to our refining hub in Lloydminster and can be transported via committed export pipeline capacity to our refineries and other U.S. markets.
“Our Saskatchewan production is not subject to government-mandated production quotas. In addition, we have many diverse investment options, including the Atlantic region, a large downstream presence in the U.S. and high-netback growth production in Asia. As such, competitiveness of jurisdiction will remain a key parameter for our investment decisions.”
Peabody’s remark about government-mandated production quotas was a reference to Alberta.
Husky said Dee Valley will ramp up through year end, increasing Husky’s thermal production in Saskatchewan to 90,000 barrels per day (bbls/day). That follows the company’s Rush Lake 2 Lloyd thermal project, which began production in October 2018 and achieved its 10,000 bbls/day design capacity the following month.
The company said current Rush Lake 2 production is approximately 11,000 bbls/day, with a steam-oil ratio of 2.1, among the best in the industry.
“With low operating costs, good oil quality and advantaged logistics, Husky’s Lloyd thermal projects further reduce the Company’s break-even Brent oil price, advancing delivery of its five-year business plan. Husky’s heavy oil production is matched by its downstream processing and pipeline takeaway capacity through 2021, with tight physical integration providing for increased margin capture,” said Husky.
“Four additional Saskatchewan thermal projects are being advanced through 2022, with a combined design capacity of 40,000 bbls/day:
- at Spruce Lake Central, drilling has been completed and construction of the Central Processing Facility is progressing, with first production anticipated in the second half of 2020;
- at Spruce Lake North, foundation work and module fabrication is under way, with first oil planned around the end of 2020;
- at Spruce Lake East, lease construction is advancing and first production is set for around the end of 2021;
- at Edam Central, regulatory approval has been received and first production is expected in 2022.”