Husky plans three more thermal projects in Lloydminster area, refinery expansion decision in 2017

Calgary – Husky Energy announced its 2017 capital budget, and it’s up significantly from last year’s $2 billion, to the range of $2.6 billion to $2.7 billion.

For Saskatchewan, plans for expansion of the Lloydminster asphalt refinery and new thermal plants top the list.

Newly minted CEO Rob Peabody said in a Dec. 13 release, “"Our investment program will generate higher margins, further lower our corporate break even and increase our free cash flow."

Husky plans to add approximately 45,000 barrels per day (bpd) of new higher return production, with average production for the year expected to be in the range of 320,000-335,000 barrels of oil equivalent per day (boepd).

In looking at future thermal projects that made sense even with oil in the US$30s and US$40s per barrel WTI, the company identified 18 more potential Lloyd thermal projects.

Their plans are global, from Indonesia to offshore Newfoundland. But in the Lloydminster area, the company noted plans of “Increasing volumes from the Edam East, Vawn and Edam West Lloyd thermal projects, the Tucker Thermal Project and the Sunrise Energy Project are expected to raise average thermal production to about 125,000 bpd, an increase of more than 30 percent over 2016 average thermal production.”

Lloyd and Tucker Thermal projects have $600 million to $630 million pegged in capital expenditures. Lloyd non-thermal capex is set at $85 million to $90 million.

For mid-term growth, the company plans three new Lloyd thermal projects with total design capacity of about 30,000 bpd have been sanctioned at Dee Valley, Spruce Lake North and Spruce Lake Central. Subject to regulatory approval, first production for all three is expected in 2020. Development continues on a 10,000 bpd Rush Lake 2 Lloyd thermal project, with first oil scheduled for the first half of 2019.

Refinery expansion

Engineering is progressing to provide for the expansion of Lloydminster asphalt capacity to 60,000 bpd by 2021 to accommodate growing Lloyd thermal volumes; the project will be considered for sanction in 2017.

Additionally, the company is increasing investment in Western Canada resource plays, with 16 wells slated to be drilled next year. This will contribute to an anticipated increase in resource play production to about 36,000 boepd by the end of the year.

Husky’s production projections illustrate the continued growth of its thermal emphasis. Its guidance for 2017 shows annual average production expected to be in the range of 320,000-335,000 boepd. Of that, Lloyd and Tucker thermal is expected to be 103,000 to 105,000 bpd, while Lloyd non-thermal is pegged at 44,000 to 46,000 bpd. Oilsands thermal is set at 20,000 to 22,000 bpd.

A four-week turnaround is planned at the Lloydminster asphalt refinery in the second quarter. The Lloydminster Upgrader will undergo a seven-week turnaround beginning in the second quarter.

The company has finished about 80 per cent of its planned dispositions of properties in Western Canada. Peabody noted that it’s not a fire sale. 

© Copyright Pipeline News

Comments

NOTE: To post a comment you must have an account with at least one of the following services: Disqus, Facebook, Twitter, Google+ You may then login using your account credentials for that service. If you do not already have an account you may register a new profile with Disqus by first clicking the "Post as" button and then the link: "Don't have one? Register a new profile".

The Pipeline News welcomes your opinions and comments. We do not allow personal attacks, offensive language or unsubstantiated allegations. We reserve the right to edit comments for length, style, legality and taste and reproduce them in print, electronic or otherwise. For further information, please contact the editor or publisher, or see our Terms and Conditions.

comments powered by Disqus