Cenovus starts production from Phase F at Foster Creek oil sands project

Cenovus Energy Inc., Calgary, started oil production earlier this month at its recently completed Phase F expansion at its Foster Creek thermal oil sands project in western Canada. Phase F is expected to add 30,000 b/d of capacity, with production ramping up over the next 12-18 months.

The project involves steam-assisted gravity drainage (SAGD).

Phases G and H are under construction and are expected to add another 30,000 b/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 b/d. Following the completion of Phases F, G and H, optimization work is expected to increase total capacity by another 15,000-35,000 b/d.

Cenovus expects the F, G and H expansion and optimization projects can be completed with capital costs of $35,000-38,000/incremental barrel, better than industry average, it said.

“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% and 95% of plant capacity. In July, production averaged 102,000 b/d as volumes were impacted by scheduled maintenance on Cenovus’s cogeneration facility. August volumes averaged 119,000 b/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.