|
MEG oil sands expansion gets OK
Gary Park For Petroleum News
MEG Energy, a Canadian oil sands startup backed by Chinese participation, has received regulatory approval for a 150,000-barrel-per-day addition to its Christina Lake project in northeastern Alberta.
In 2005, China National Offshore Oil Corp. became the first of China’s state-owned oil companies to enter the oil sands, paying C$150 million for a 16.69 percent stake in MEG.
The Alberta Energy Resources Conservation Board gave the green light for the Christina Lake expansion at the same time that MEG reported its two startup phases at the thermal-recovery operation produced 30,032 bpd in the fourth quarter, surpassing the nameplate capacity of 25,000 bpd.
A 35,000 bpd Phase 2B expansion had previously been approved and is expected on-stream in 2013 at a cost of C$1.4 billion, MEG said.
Assuming Alberta Environment and the Alberta government ratify the ERCB decision, MEG can set its sights on an eventual Christina Lake target of 210,000 bpd by 2020.
C$1.37 billion price tag The price tag on the 150,000 bpd addition is C$6 billion and will account for the bulk of MEG’s capital spending plan for 2012 C$1.37 billion.
UBS Securities said in a research note that the latest production numbers “give the street more confidence” that MEG can achieve the high end of its 2012 guidance of 26,000-28,000 bpd.
It said MEG realized bitumen prices of C$67.99 per barrel in the fourth quarter, helped by “solid heavy oil differentials.”
MEG said its steam-to-oil ratio, measuring the number of barrels of steam required to produce each barrel of bitumen — a key indicator of energy efficiency in the sector — was 2.3, compared with the projected facility design of 2.8.
Per barrel operating costs during the final quarter of 2011 were C$13.16 compared with C$13.89 a year earlier, and after including power sales from MEG’s cogeneration facilities, and net operating costs dropped to C$8.50 from C$11.01.
MEG is also working on plans for an in-situ development of its Surmont lease in northeastern Alberta, targeting 260,000 bpd by 2020 from a lease estimated to hold 837 million barrels of contingent resources.
| 