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EnCana raises oil sands sights
Gary Park Petroleum News Calgary correspondent
The global pioneer in commercial steam-assisted oil sands projects and bolstered by a record financial performance, EnCana is ready to pick up the pace of its bitumen ventures in northern Alberta.
The Canadian independent aims to accelerate targeted output from its ground-breaking Foster Creek project, while preparing to spend another C$400 million to C$600 million on a second-phase expansion that could yield up to 50,000 barrels per day.
The estimated construction costs for the new phase are between C$10,000 and C$12,000 per barrel of production.
Approval is expected from the Alberta Energy and Utilities Board by year�s end, while EnCana pursues 50 percent growth to 30,000 bpd in 2004, said Harbir Chhina, EnCana�s vice-president of oil recovery.
Financing is not a major obstacle for EnCana, which has been raking in ever-growing profits as well as collecting C$1.07 billion from the sale earlier this year of its remaining stake in the Syncrude Canada oil sands consortium.
Chhina said the lost share of Syncrude production should be more than offset by EnCana�s current oil sands development plans.
With the strategic goal of taking full control of the timing and operations of its projects, the company has put its oil sands focus on Foster Creek, which started operations in late 2001, and Christina Lake.
Both are based on steam-assisted gravity drainage technology, which pumps steam to bitumen deposits at depths of about 1,600 feet, forcing the melted bitumen to the surface, enabling the operator to exploit reserves that are too deep to mine.
EnCana�s current goal is to achieve oil sands volumes of 100,000 bpd by 2007.
Petro-Canada having problems at MacKay River Petro-Canada, the only other steam-assisted gravity drainage producer, has been grappling with some operating problems at its C$290 million MacKay River project, which came on stream in October 2002.
Last month it said C$10 million was being spent on upgrading plant equipment after completing a root-cause analysis of what it regarded as unsatisfactory performance at MacKay River.
It hopes the new system and procedures will see its target of 30,000 bpd reached by mid-2004 rather than the end of 2004. Second quarter output slumped to an average 5,000 bpd from 13,200 bpd in the opening quarter. Petro-Canada studies Meadow Creek options Meanwhile, Petro-Canada is still pondering options for its C$800 million, 80,000 bpd Meadow Creek steam-assisted gravity drainage project, which was put on hold in May because of the crippling impact of cost overruns in the oil sands sector.
Petro-Canada chief executive officer Ron Brenneman told analysts last month that the oil sands projects are �not walk-away, barn-burner economics. A lot of these are fairly marginal. They have to be very carefully designed and very carefully executed.�
He said management is currently eliminating some possibilities, but they have not reached any final. The company had previously indicated a decision would likely be made before year�s end.
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