Husky investing $700 million in Mervin and Edam area

Calgary, Lloydminster – Husky Energy is continuing with its strategy to invest into small scale thermal projects, and lots of them.

On Dec. 4 the company announced it is sanctioning another two Lloyd thermal projects. They are planned for Westhazel (west of Mervin) and Edam Central. Each create about 30 full time permanent jobs and about 200-250 jobs during construction. Each represents an investment of about $350 million ($700 million total).

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In announcing it 2018 budget, the company said, “Husky’s operational focus in 2018 is to ramp up the Tucker Thermal Project, Phase 1 of the Sunrise Energy Project and the BD Project in Indonesia to full rates. In addition, the company will integrate its newly-acquired Superior Refinery, advance six Lloyd thermal projects, move forward with the Liuhua 29-1 field development offshore China and progress the West White Rose Project offshore Newfoundland and Labrador.”

Their thermal bitumen projects, which include Lloyd, Tucker and Sunrise, will see a substantial boost in the budget. Those areas had $560 to $590 million designated for 2017. The 2018 budget increases those to $895 to $930 million.

Total capital spending is expected to be $2.9 to $3.1 billion, less than the estimated $3.3 billion annual average capital spending forecast in the five-year plan at the company’s 2017 investor day, reflecting greater capital efficiency.

Upstream project spending is expected to be largely allocated to growing the Lloyd thermal portfolio, with 60,000 bpd of new production scheduled to be brought online between 2019 and 2021, and the construction of the 75,000-bpd West White Rose Project in the Atlantic region (52,500 bpd Husky working interest), with first oil planned in 2022.

The Western Canada asset disposition program is now substantially complete. Since December 2015, about 52,000 boepd of higher-cost legacy production has been sold or is expected to be sold by the end of 2017, with an associated reduction in asset retirement obligations of approximately $840 million. Over the same period, Husky added approximately 66,000 boepd of new, lower-cost production, largely from the thermal and Offshore businesses.

The 10,000 bpd Rush Lake 2 thermal project has been accelerated and is expected to come on production in the first quarter of 2019. Dee Valley is expected to be ready the first half of 2020. Spruce Lake North and Spruce Lake Central are expected in the second half of 2020.

The new projects, at Edam Central and Westhazel, are projected to be online in the second half of 2021. Future Lloyd thermal projects, all of which are expected to produce 10,000 bpd, are planned to proceed at an average of two projects per year.

Over the next four years Husky expects to grow its Lloyd thermal production by 60,000 bpd, with more projects in the wings.

A five-week partial turnaround at the Lloydminster Upgrader is planned in the second quarter of 2018, with expected utilization rate of 70 per cent during the maintenance period.

In response to the announcement, Premier Brad Wall posted on Facebook, “Thank you to Husky Energy for investing $700 million in two new Saskatchewan heavy oil facilities.

“We have worked to foster a positive business climate that is open to investment and growth; in this case creating up to 300 new construction jobs and 30 permanent jobs.

“That is why our made-in-Saskatchewan climate plan does not include a carbon tax,” Wall said.

December also saw Husky dramatically increase its active drilling rig count in Saskatchewan. As of Dec. 13 the company was No. 3 on the leader board of top 5 active operators in Canada, according to sister publication Rig Locator(riglocator.ca). Whereas they typically would have one or two rigs working in northwest Saskatchewan, that number jumped to six, likely the highest number the company has had in the region in years.

Precision Drilling Rig 192 was working at Paradise Hill, and Rig 197 was at Rush Lake. Akita Drilling Ltd. Rig 29 was at Tangleflags, while their Rig 8 was at Dee Valley. Big Gully had Precision Drilling Rig 198 and Akita Drilling Rig 6 working close to each other. 

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