Husky 'On Track' with New Business Initiatives
Husky Energy is on track to deliver another year of strong business and operational results and is announcing several new initiatives to build on its momentum.
"We have consistently executed against our strategy for nine consecutive quarters," said Husky CEO Asim Ghosh. "This performance is a result of strong delivery and reliability in all business segments and our focused integration strategy. Our major growth projects in Asia Pacific, the Oil Sands and the Atlantic Region are progressing and continue to meet their milestones.
"The rejuvenation of our foundation in Heavy Oil and Western Canada is also well underway with increased production from heavy oil thermal projects and an emerging focus on oil resource plays."
New initiatives announced today include:
Production in 2013 is expected to be in the range of 310,000 to 330,000 barrels of oil equivalent per day (boe/day), compared to estimated average annual production of 301,000 boe/day for 2012.
The company is on track to meet its five-year compound annual production growth goal of 3-5 percent as set in 2010. A new target has been set for the plan period 2012-2017 at an increased compound annual growth rate of 5-8 percent.
The $4.8 billion capital expenditure program for 2013 is comparable with the $4.7 billion program in 2012. Approximately 50 percent of upstream spending will be directed towards the company's growth pillars.
The Rush Lake heavy oil thermal project has been sanctioned and the production capacity has been increased to 10,000 barrels per day (b/d) compared to the originally planned 8,000 b/d. First oil is expected in 2015.
Production from heavy oil thermal is expected to achieve 55,000 b/d by 2017 with an additional four thermal projects planned to come on stream, including the 3,500 b/d Sandall project, now under construction.
Two new heavy oil thermal projects, the 8,000 b/d Pikes Peak South and 3,000 b/d Paradise Hill, came online ahead of schedule in 2012 and are currently achieving production levels approximately 40 percent higher than their design rates.
The Liwan Gas Project in the South China Sea is approximately 75 percent complete and remains on target for first production in late 2013/early 2014.
Offshore Indonesia, the company has made four new gas discoveries on the Madura Strait Block. The discoveries are being evaluated for potential tie-in to existing nearby infrastructure.
Substantial cost certainty related to the first phase of the Sunrise Energy Project was achieved in the fourth quarter with the conversion of the lump sum contract for the Central Processing Facility. Over 85 percent of the $2.7 billion cost estimate for Phase 1 is now fixed and incorporates all significant contract conversions and facility and efficiency design improvements.
Work continued in anticipation of sanction of the South White Rose Extension Project in the Atlantic Region, with the excavation of a subsea drill center. First oil is expected in 2014.
A five-year contract was awarded for West Mira, (UDW-semisub) to support the company's exploration and development opportunities in the Atlantic Region.
2012 Operational Highlights
The company focused on executing its business plan in 2012 and the stage is set for the delivery of its major growth projects. Highlights include the following:
The Pikes Peak South thermal project achieved first oil in the second quarter and reached its 8,000 b/d design rate within two months. The project is now realizing production of approximately 11,000 b/d.
The Paradise Hill thermal project achieved first oil in the second quarter and is achieving production beyond its 3,000 b/d design capacity at approximately 4,600 b/d.
A single well-pair pilot at Rush Lake is contributing approximately 1,000 b/d of production and has provided the basis for expanding the full commercial project to 10,000 b/d.
Site grading was completed at the 3,500 b/d Sandall thermal development and the project remains on track for commissioning in 2014.
Horizontal well production reached 8,000 b/d. Thirty-one well pads were added in 2012 and 125 wells were drilled.
A carbon dioxide (CO2) capture and liquefaction project was completed at the company's ethanol plant in Lloydminster. CO2 from the plant is captured and used to enhance oil recovery in nearby reservoirs. The innovation provides a double benefit by allowing more oil to be recovered while reducing CO2 emissions.
The company is moving forward with the transformation of its foundation in Western Canada to resource plays. Development activities are focused on six oil resource plays, including the Bakken, Viking, Cardium, Lower Shaunavon, Rainbow Muskwa and the Slater River Canol in the Northwest Territories.
At Slater River, applications have been filed to construct an all-season access road to support further development. Evaluations will continue this winter on two vertical wells drilled during the previous season.
Development of the liquids-rich gas Ansell play continued with 17 wells expected to be completed by the end of the year. Initial production tests were conducted on the Kaybob Duvernay play, delivering strong liquids yields.
The first phase of the Sunrise Energy Project achieved its major construction milestones according to plan and remains on schedule for first oil in 2014.
The Sunrise project continues to achieve its major milestones. All significant contracts for Phase 1, including the Central Processing Facility, have now been converted to lump sum payment. Over 85 percent of the project's costs are now fixed and the project is more than 50 percent complete.
Planning, design and engineering for the next phase of Sunrise continues. Regulatory approvals are in place for up to 200,000 bbls/day of production. (50 percent W.I.)
The Liwan Gas Project in the South China Sea remains on schedule for first gas in late 2013/early 2014. The overall project is now approximately 75 percent complete.
The central platform jacket was installed on the seabed in preparation for the installation of the topsides portion of the platform in the second quarter of 2013.
Offshore Indonesia, the MDA and MBH dual-field development is on track for first production in 2014/2015, while first gas from the BD field in the Madura Strait Block is anticipated in 2015/2016.
In addition, four new gas discoveries were made in the Madura Strait Block offshore Indonesia. The discoveries are being evaluated for potential tie-in to existing nearby infrastructure.
The SeaRose FPSO offstation program was completed safely, ahead of schedule and under budget in the third quarter. An infill well was brought online with results as expected.
A new subsea drill center was excavated in preparation for development of the South White Rose extension. Subject to final approvals, first oil is anticipated from this project in 2014.
Pre-sanction work continued on the West White Rose development.
To support future drilling and exploration activities, a five-year contract was awarded for a new harsh environment semi-submersible rig. The West Mira is scheduled for delivery in 2015.
Strong refinery and upgrader throughputs contributed substantially to 2012 results. The Company''s focused integration strategy captured additional revenue and reduced risks associated with volatile commodity pricing.
A planned turnaround was completed at the Lloydminster Upgrader in the second quarter and subsequently the Upgrader achieved record monthly production.
A new continuous catalytic reformer is expected to be completed by year-end at the Toledo Refinery. The unit replaces three older units and is expected to improve operating efficiency, overall operating reliability and reduce emissions.
Construction of a 20,000 bbls/day kerosene hydrotreater at the Lima Refinery is nearing completion, which will increase jet fuel production capabilities and enhance product flexibility.
Storage capacity was expanded at Hardisty with the completion of a 300,000-barrel storage tank that will further improve the Company's ability to take advantage of pricing opportunities. Additional throughput capacity has been secured at Patoka, Illinois to increase crude grade flexibility and maximize arbitrage capabilities.
In 2010, the company set a compound annual production growth target of 3-5 percent through the plan period 2010-2015 and is on track to achieve that goal. A new target has now been set for the plan period 2012 to 2017 at an increased compound annual production growth rate of 5-8 percent.
Average annual production for 2012 is forecast to be 301,000 boe/day, which is within the guidance of 290,000 to 315,000 boe/day and reflects the SeaRose and Terra Nova offstation programs.
Production in 2013 is expected to be in the range of 310,000 to 330,000 boe/day. The 2013 forecast includes a planned decrease in natural gas production and an increase in light, medium and heavy oil production, reflecting the shift in capital to higher netback opportunities.
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