Husky, which holds a 100 percent interest in the Sunrise lease, intends to develop the 200,000 barrel per day project in phases. The EUB approval relates to Husky's bitumen extraction plans, and Husky is completing its alternatives for upstream development, upgrading, transportation and marketing of the produced bitumen.
"We are pleased that the Sunrise Oil Sands Project has received regulatory approval in a timely fashion. Husky now looks forward to successfully developing this world-class asset in a prudent manner that maximizes shareholder value," said Mr. John C.S. Lau, President & Chief Executive Officer, Husky Energy Inc.
The Company submitted its public disclosure document in February, 2004 and commercial application in August, 2004. Husky has worked closely with various stakeholders, including First Nations, to address issues related to the proposed development. To date, Husky has drilled approximately 500 resource evaluation wells and analysed approximately 40,000 meters of core to establish the bitumen oil resources at Sunrise. With the issuance of the EUB approval, Husky can commence the next phase of the project, which will encompass engineering for the upstream element of the development and its upgrading and downstream options.
The Sunrise lease covers 57,634 acres in the prolific Athabasca oil sands deposit. The lease contains bitumen pay zones ranging up to 80 meters in thickness that are well suited to in-situ extraction. Husky will use an in- situ oil recovery technique known as steam-assisted gravity drainage (SAGD) to recover the bitumen. The SAGD process involves drilling pairs of horizontal wells into the formation, injecting steam into the upper wells to heat the reservoir, and producing the heated bitumen and condensed steam from the lower wells to the surface.
Husky is also pleased to report that excellent progress continues to be made on its inaugural Tucker Oil Sands development. The $500-million project, located 30 kilometers northwest of Cold Lake, Alberta, is on schedule and on budget. It is estimated that the Tucker lease contains original bitumen in place of 1.27 billion barrels, and that approximately 352 million barrels of oil resources will be recoverable.
Husky is using SAGD technology to recover bitumen at Tucker. Construction at Tucker began in the fall of 2004, with commissioning of facilities and steam injection by mid-2006. First oil production is expected before the year end of 2006. A key advantage of the Tucker thermal project is its proximity to Husky's transmission pipeline system, which can transport diluted bitumen to the Company's heavy oil upgrader at Lloydminster, Saskatchewan, to be processed into premium synthetic crude.
Husky's total oil sands leases comprise approximately 425,000 acres and contain original bitumen in place of 33.5 billion barrels and possible reserves of 3.6 billion barrels.
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