Mr. Brian Ferguson reports
CENOVUS PROVIDES UPDATE ON FOSTER CREEK; FIRST OIL ACHIEVED AT PHASE F
Cenovus Energy Inc. achieved first oil production at its recently completed Foster
Creek phase F expansion earlier this month. Phase F is expected to add
30,000 barrels per day (bbl/d) of capacity, with production ramping up
over the next 12 to 18 months. By year-end, production from phase F is
expected to be approximately 5,000 bbl/d. Phases G and H are under
construction and are expected to add another 30,000 bbl/d each with
first production anticipated in late 2015 and 2016, respectively. This
will bring total expected gross production capacity at Foster Creek to
210,000 bbl/d. Following the completion of phases F, G and H,
optimization work is expected to increase total capacity by another
15,000 to 35,000 bbl/d.
Cenovus expects the F, G and H expansion and optimization projects can
be completed with capital costs of between $35,000 and $38,000 per
incremental barrel, better than industry average.
"In July, we indicated that capital costs for the F, G and H expansion
were trending higher and we committed to providing additional
information," said Brian Ferguson, Cenovus president and chief executive
officer. "One of the key drivers of the cost increases is the impact of
changes we made to the phases that we believe will result in better
long-term plant reliability and production efficiency."
Changes to the F, G and H expansion include improvements to the oil and
water plant, safety systems, completion designs, and the incorporation
of recent regulatory changes. The revised cost estimate is based on
actual costs for phase F, which Cenovus has used to update cost
estimates for phases G and H and optimization.
The Foster Creek project has demonstrated consistent performance since a
planned turnaround in late 2013, with production averaging between 90 per cent
and 95 per cent of plant capacity. In July, production averaged 102,000 bbl/d
as volumes were impacted by scheduled maintenance on Cenovus's
cogeneration facility. August volumes averaged 119,000 bbl/d and
September production continues to be strong. The company estimates a
planned partial turnaround later in the month will have minimal impact
on production volumes.
"Foster Creek is a cornerstone asset that continues to generate free
cash flow and strong returns," said Mr. Ferguson. "We believe the changes
we've made to our latest expansion project will allow us to have more
consistent performance as we work towards adding significant new
production capacity over the next few years."
Cenovus anticipates Foster Creek's steam to oil ratio (SOR), which
measures how much steam is required to produce one barrel of oil, will
range between 2.6 and 3.0 until all phases of F, G and H are complete.
At that point the SOR is expected to drop below 2.5. Foster Creek is
operated by Cenovus and jointly owned with ConocoPhillips.
We seek Safe Harbor.
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