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Cenovus Receives Approval to Expand Christina Lake

Source: www.gulfoilandgas.com 4/26/2011, Location: North America

Cenovus Energy Inc. has received approval from the Alberta Energy Resources Conservation Board (ERCB) to move forward with a major expansion at its Christina Lake oil sands operation. The approval covers three expansion phases (E, F and G) of 40,000 barrels per day (bbls/d) each, which would bring gross production capacity to 218,000 bbls/d once complete.

“The regulatory approval at Christina Lake is a significant step in our plan to increase the company’s net asset value,” said Brian Ferguson, President & Chief Executive Officer of Cenovus. “This is a major milestone that allows our expansion plans at Christina Lake to remain on schedule. Additionally, as a result of this approval and the expansion of the development plan area, we expect to add substantially to our Christina Lake proved reserves at year end.”

Christina Lake is a major part of the company’s plan to grow oil sands production five-fold by 2019. With this approval, Cenovus has oil sands expansions totaling 290,000 bbls/d of gross production capacity either under construction or approved by the regulators. That’s in addition to its current combined gross production capacity of 138,000 bbls/d at Christina Lake and Foster Creek.

Engineering and equipment fabrication for Christina Lake phase E is already underway with first production planned for 2014. Phase F is expected to begin production in 2016 and phase G the following year. The first phase of the expansion is expected to be sanctioned by Cenovus and its partner by the end of 2011.

“We are especially proud of our ability to deliver industry-leading capital efficiencies as we expand our oil sands projects,” said John Brannan, Executive Vice-President & Chief Operating Officer of Cenovus. “We are currently building our Christina Lake expansions at a capital efficiency of about $22,500 per flowing barrel. This is largely thanks to our manufacturing approach for constructing expansions and the improvements our staff are able to identify and implement with each new phase.”

Cenovus’s Christina Lake operation is located near the community of Conklin in northeast Alberta, about 120 kilometres south of Fort McMurray. The operation began as a pilot project in 2000 and is currently producing about 18,000 bbls/d gross from 19 wells. Christina Lake is one of the company’s premier growth assets with more than 700 million barrels of proved plus probable reserves and 800 million barrels of best estimate economic contingent resources. The operation currently has an industry-leading steam to oil ratio (SOR) of less than 2.0, which means less than two barrels of steam are needed to produce each barrel of oil. The low SOR contributed to low average operating expenses of $16.47 per barrel at Christina Lake in 2010.

Current expansions nearing completion
Christina Lake currently has two additional phases of 40,000 bbls/d of gross production capacity each under construction. Phase C is almost complete, with final testing and commissioning adjustments now taking place. The plan is to start injecting steam by the end of this quarter, with first production expected in the third quarter of this year. Construction is also progressing well on phase D with more than half of the work complete. Most of the larger pieces of infrastructure are already at site and the final modules are being completed at the company’s assembly yard in Nisku, Alberta. Steam injection at phase D is expected in the first quarter of 2013 with production starting in the second quarter. Construction for both phases is on schedule and on budget. An application for an additional 40,000 bbls/d expansion, phase H, at Christina Lake is expected to be submitted for regulatory review in 2013. That would bring the project’s total gross production capacity to 258,000 bbls/d by 2019.

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