Cenovus Energy — the Canadian oil producer spun off from Encana just over two years ago — plans to increase rail shipments of crude oil from Saskatchewan and Alberta over the next few months, but is hesitant about overselling that prospect.
Don Swystun, the company’s executive vice president of refining, marketing and transportation, told analysts April 25 that the current rail volumes are about 2,000 barrels per day and could grow to 5,000 bpd by late this year.
He also said Cenovus is assessing the possibility of converting its railcars that carry diluents from Kitimat, British Columbia, so they can carry crude.
Beyond that Swystun gave no indication that the company has greater ambitions to use rail.
Expansion gathering pace
However, its expansion from the Alberta oil sands to unconventional plays in Western Canada is gathering pace.
In searching for tight oil, Cenovus has drilled four wells in the Viking formation in Alberta and Saskatchewan this year and will drill more over the rest of 2012, but cautions these are “early days.”
John Brannan, chief operating officer, said “we have some interesting plays that we’re working on in Alberta, but we are not ready to divulge those at this point.”
Lower Shaunavon output in Saskatchewan averaged 4,100 bpd in the first quarter, up about 150 percent from a year earlier, and Cenovus has 87 horizontal wells and one vertical well producing from the play.
Its Bakken operation in Saskatchewan averaged 2,700 bpd from 29 wells at the end of the first quarter.
Cenovus forecast that those plays will be major contributors to its goal of 65,000-75,000 bpd of oil production outside its oil sands activities by the end of 2016.
—Gary Park
