Husky Energy announces first production of its Sunrise Energy Oilsands Project
Husky Energy (ticker: HSE) announced Wednesday that oil production at the Sunrise Energy Project in northern Alberta has begun. Sunrise is
located about 37 miles northeast of Fort McMurry with 3,700 MMBO of 3P reserves, according to the company.
Steam operations at the project began in December 2014. Total production is expected to ramp up to full capacity of 60 MBOPD around the end of
2016, according to the company’s press release. HSE is the operator of Sunrise with a 50% working interest with BP (ticker: BP), and has net reserves of 180 MMBO proved, 1,242 MMBO probable and 431 MMBO possible in the project. BP operates the jointly-owned BP-Husky Toledo refinery where bitumen from Sunrise can be processed.
Regulatory approvals are in place for 200 MBOPD. The first phase, which started production this week, represents a $2.5 billion investment. Pre-engineering for Phase 2 is already underway.
“Sunrise is the latest in a series of resilient, low sustaining capital projects to come online from our diverse portfolio,” said CEO Asim Ghosh. “We are expecting more than 40 years of production from this reservoir with very low ongoing capital costs.”
Despite the low price of oil, many companies continue to move forward with projects in the Canadian oilsands. The projects’ long life spans and high up-front investment costs have kept them off the chopping block for many companies as they seek to cut capital expenditures.
Husky performs well in comparison to a group of 50 other Canadian E&P companies in EnerCom’s International E&P Weekly for the week ended March 6, 2015. The company’s asset intensity (defined as the percentage of every EBITDA dollar required to maintain production) is 57% compared to the group average of 79%. The company also has a very low debt-to-market cap of 18%. The group average is 207%.
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