Husky Energy South China Gas-Find Pegged At 4-6 Tcf

CALGARY Oct 21, 2006 (Dow Jones Newswires)

Husky Energy Inc. (HSE.T) estimated it has discovered between four trillion and six trillion cubic feet of natural gas with its Liwan 3-1-1 well in the South China Sea.

During a conference call Friday, Husky president and chief executive John Lau said the next step in proceeding toward commercial development of the discovery, which it made during this year's third quarter, is to drill more wells to delineate the reservoir. He said the company expects to have a rig available for the drilling program by the end of next year.

Husky also is conducting studies to determine whether natural gas from the proposed development should be marketed in the Republic of China or Hong Kong, Lau said.

At the White Rose oil field offshore Newfoundland, Husky is planning with its partner Petro-Canada (PCZ) to add a sixth production well in November to increase average oil output from the project to 125,000 barrel a day from about 100,000 barrels a day, company executives said. They said the partners plan to add a further well by the end of next year to increase White Rose's production capacity to 140,000 barrels a day.

Lau said the White Rose partners are making regulatory applications for the proposed capacity increases.

Husky chief operating office Robert Peabody said the White Rose wells are performing well, with only small amounts of natural gas and water being produced with crude oil from the reservoir.

In western Canada, Husky has shifted its development emphasis to crude oil from natural gas in response to weaker-than-anticipated natural gas prices, Lau said.

Peabody said the company is continuing a debottlenecking program at its heavy-oil upgrader located in Lloydminster, on the Alberta/Saskatchewan border. A planned maintenance shut-down of the facility, which converts sticky crude from northern Alberta and Saskatchewan into higher-priced synthetic light crude oil, has been deferred to the second quarter of 2007 from fall of this year, he said.

Husky is an integrated oil and natural gas company.

Copyright (c) 2006 Dow Jones & Company, Inc.

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