CALGARY — Canadian Natural Resources Ltd. is plotting future expansions to its Kirby oilsands project in northern Alberta just as work begins on its first phase.
The Calgary-based oil and gas producer (TSX:CNQ) said Thursday its initial Kirby development, expected to cost $1.25-billion, has the go-ahead from regulators and its board of directors.
Early work has begun at the site 85 kilometres north of Lac la Biche, Alta., and drilling is set to begin in April of next year. First-steam is expected toward the end of 2013.
During the quarter, Canadian Natural bought adjacent land for future expansions. In all, Kirby could have an ultimate capacity of between 70,000 and 100,000 barrels of oil per day.
“We’ll be able to leverage the central facilities... and get better overall capital efficiency and lower operating costs, and just an overall more economic project,” president and chief operating officer Steve Laut said in an interview.
Shares in Canadian Natural rose more than four per cent to $39.31 in late-afternoon trading on the Toronto Stock Exchange.
Also Thursday, the company reported third-quarter net earnings of $580 million, down from $658 million in the corresponding quarter a year ago.
Earnings per share stood at 53 cents in the quarter, down from 61 cents a year but well ahead of the 48 cents per share analysts polled by Thomson Reuters were on average expecting.
Canadian Natural is one of Canada’s biggest oil and natural gas producers, with the bulk of its operations in Western Canada. It also has holdings in the U.K. portion of the North Sea and off the coast of West Africa.
Canadian Natural and several other oilsands producers were affected by outages on two U.S. pipelines operated by an affiliate of Enbridge Inc. (TSX:ENB).
Crude volumes from Canada to the United States were crimped as Enbridge made repairs to its Line 6B in Michigan and Line 6A in the Chicago area. As a result, the price-gap between light crude and the heavier variety produced in the oilsands widened.
The pipeline woes cost Canadian natural $50 million during the third quarter, and another $100 million hit is expected in the fourth quarter, Laut said in the interview.
In addition to Kirby, its presence in the oilsands also includes the massive Horizon mine north of Fort McMurray, Alta.
Canadian Natural is planning for a second phase at Horizon, but won’t have any more details until at least early next year, Laut said.
More than three years ago, two Chinese temporary foreign workers died at the Horizon oilsands site when an oil tank they were working on collapsed. Canadian Natural, and a Chinese engineering firm, have been charged under Alberta’s Occupational Health and Safety Act, and are expected to go on trial next year.