Husky is building two more 10,000 barrels per day thermal in the Lloyd region including Edam Central near the Edam East thermal in this photo, and Westhazel, near Mervin with a startup in 2021. FILE PHOTO
Increasing thermal heavy oil production in the Lloydminster region is the focus of Husky Energy’s 2018 spending plans for upstream capital projects.
The company will invest between $895-930 million to increase thermal heavy oil production by 12 per cent in 2018 from Lloyd, Tucker Lake and Sunrise bitumen projects.
Husky forecasts it will spend $2.9-3.1 billion worldwide compared with its 2017 forecast of $2.2 billion to $2.3 billion.
Husky estimates 2018 production of 320,000 to 335,000 barrels of oil equivalent per day, despite 20,000 boe/day in 2017 asset sales expected to close by year end.
There is no specific capital spending breakdown in the budget for Lloyd thermals, but Husky spokesperson Mel Duvall said, “It’s fair to say the lion’s share of the thermal budget is going towards the Lloyd thermal development program.”
Husky also announced they will build two new Lloyd thermals, one at Westhazel, west of Mervin and one near Edam, called Edam Central during a conference call on Monday.
Each project will create about 30 full-time permanent jobs and about 200-250 jobs during construction, with a total investment of about $700 million.
Edam Central and Westhazel will add a combined 20,000 barrels-per-day of capacity when they start up in the second half of 2021.
“We are currently building four thermals at Rush Lake 2, Dee Valley, Spruce Lake Central and North,” said COO Rob Symonds, speaking about operational objectives for 2018.
“These will add another 40,000 bbls of capacity when they come online starting in 2019 and continuing into 2020.”
In total, Lloyd production will grow by about 60,000 bbls by 2021, an increase of about 75 per cent from today.
Symonds said 2018 activities will be focused on building out these projects with the same kind of lower cost cut and paste approach that has been so successful in the past.
“This growth is supported by our midstream partnership (Husky Midstream Limited Partnership), which is funding the pipeline takeaway capacity for our next eight thermal projects,” he said.
The midstream partnership is funding the estimated $80 million cost of a new 52 kilometre pipeline and condensate line to be built in 2018, to initially connect production from the Spruce Lake North and Central thermals to operations in Lloydminster.
Husky is also planning a five-week partial turnaround at the Lloydminster upgrader in the second quarter of 2018 with an expected utilization rate of 70 per cent during the maintenance period.
Several projects, including growing the Lloyd thermals are expected to contribute to a compound annual production growth rate of seven per cent over the next four years, with production rising to 400,000 boe per day in 2020.
“Our 2018 program is a continuation of the five-year plan we set out at Investor Day (May 30),” said CEO Rob Peabody.
“We are ahead on almost all the targets we set for ourselves at that time.
“In 2018, we are really reaping the benefits of the transformation of our asset base that’s been under way for a number of years.”