|
Harvest crops 2012 spending
Calgary-based Harvest Operations, a unit of state-owned Korea National Oil Corp., has joined the list of Alberta oil sands operators to move its foot from the accelerator to the brake pedal, while insisting that will not bring its start-up project to a halt.
Drilling and engineering are continuing at its BlackGold lease, targeting initial production of 10,000 barrels per day in 2014 and expecting regulatory approval in late 2012 or early 2013 for a 20,000 bpd expansion to come on stream in 2015.
Reflecting the growing nervousness within the oil sands sector, Harvest said it has restricted some aspects of BlackGold’s engineering, procurement and construction contract, trimming its planned 2012 capital spending to C$150 million from C$215 million.
Cost pressures and resulting contract changes are expected to increase the net costs of those elements to about C$520 million from the original lump-sum contract amount of C4311 million.
The company’s overall capital expenditures for 2012 have been scaled back to C$645 million from the original C$770 million, including delays in C$40 million of “discretionary projects,” although no details were released.
Site preparation complete Site preparation at BlackGold is completed and construction is under way, along with plans to drill 15 well pairs this year for the steam-assisted gravity drainage project.
The squeeze on Harvest has tightened with continuing operating losses at its Come By Chance refinery in Newfoundland, which lost C$42.5 million in the second quarter compared with C$31.7 million in the same period of 2011.
It said those results reflect the reduction in the gross margins per barrel, partly offset by a rise in throughput to 114,552 bpd from 38,016 bpd a year earlier when the refinery underwent a maintenance turnaround. The company’s average refining margin was US$2.71 per barrel in the latest quarter, down from US$8.09 in the second quarter of 2011.
Harvest said it expects throughput to average 105,000-110,000 bpd this year, with operating costs estimated at C$7 per barrel.
Harvest’s upstream production averaged 60,000 barrels of oil equivalent per day in the second quarter, up 10 percent from the same period last year. It is forecasting 57,000 boe per day at the end of 2012 and a full-year average of 59,000 boe per day.
Operationally the company plans to focus on its heavy oil plays, while setting up for drilling Deep basin liquids-rich gas in northwestern Alberta.
—Gary Park
| 