Cenovus Energy revives oilsands project

Cenovus Energy said Thursday it is reviving an oilsands project it had shelved two years ago

CALGARY — Cenovus Energy said Thursday it is reviving an oilsands project it had shelved two years ago due to the downturn in crude prices, the latest sign of a possible rebound in the oilpatch.

The Calgary-based oil producer announced Thursday it will go ahead with an expansion of its Christina Lake development in northern Alberta, making it the second oilsands project in as many months to be given new life.

The company also said it plans to invest between $1.2 billion and $1.4 billion in its operations next year, up 24 per cent from this year, and increase oil production by about 14 per cent to approximately 230,000 barrels per day.

“I am confident and I am optimistic about our prospects for the year ahead,” said CEO Brian Ferguson on a conference call.

The news came as the Conference Board of Canada released a report Thursday saying Alberta is expected to emerge from its recession next year, with real gross domestic product growth of about 2.2 per cent, thanks to anticipated rising oil prices and the rebuilding of fire-ravaged Fort McMurray.

A day earlier, Alberta Finance Minister Joe Ceci and a panel of economists meeting in Edmonton agreed the worst is over for the provincial economy.

Construction of the Christina Lake expansion is to resume next spring, Cenovus Energy said, and first oil production is scheduled for the second half of 2019.

Cenovus (TSX:CVE) said it anticipates spending an additional $800 million to $900 million to complete the 50,000-barrel-per-day, steam-driven project, bringing the total capital cost to about $1.1 billion. That would be about $500 million less than the original budget.

Last month, Canadian Natural Resources (TSX:CNQ) also cited lower costs as it announced it would resume construction of its Kirby North oilsands project, designed to produce about 40,000 barrels per day. The company said it had spent about $700 million on the project before it was halted in 2014. It expects to spend $650 million more on the development for a total of $1.35 billion, $100 million less than the original cost.

Cenovus also announced Thursday it would spend $160 million next year to drill 50 horizontal oil wells into its Palliser conventional oil block in southern Alberta after halting exploration there two years ago.

Ferguson said the field is expected to deliver profits for Cenovus at benchmark U.S. oil prices below US$35 per barrel. On Thursday, the January crude oil contract closed at US$50.84 per barrel.

On Wednesday, Calgary-based Crescent Point Energy (TSX:CPG), the most active conventional oil producer in Saskatchewan, announced a $1.45-billion capital spending budget for 2017, up 32 per cent from $1.1 billion expected to be spent this year.

Cenovus promised Thursday to update in mid-2017 the status of two other oilsands projects it stopped in 2014. It said it would continue planning for both an expansion of its existing Foster Creek project and the first phase of a new oilsands project called Narrows Lake.

Despite such momentum, oilsands analyst Michael Dunn of GMP FirstEnergy Capital said Thursday he doesn’t expect a surge in oilsands project approvals.

He said the Cenovus and Canadian Natural projects have the advantage of being partly built projects made profitable by costs savings, despite oil prices that haven’t changed much since they were deferred.

Follow ↕HealingSlowly on Twitter.

Just Posted

Alberta hiring more paramedics and buying new ambulances, none for Red Deer

Red Deer Mayor Tara Veer is not concerned the provincial government didn’t… Continue reading

‘My nightmare began again’: Close call as bus carrying Humboldt crash survivor rear-ended

CALGARY — A terrifying ordeal for Humboldt Broncos survivor Ryan Straschnitzki this… Continue reading

Halifax airport operations normalize after Boeing 747 runway overshoot

HALIFAX — The Halifax Stanfield International Airport has resumed normal operations a… Continue reading

Bentley family left without a home grateful for community support

Central Albertans are coming together to support a Bentley family left homeless… Continue reading

Red Deer RCMP ready for new mandatory alcohol screening law

Red Deer RCMP are ready to enforce a new law intended to… Continue reading

WATCH: Red Deer and District Kennel Club Dog Show at Westerner Park

The Red Deer and District Kennel Club is holding a dog show… Continue reading

Pence aide out of running to be Trump’s next chief of staff

WASHINGTON — President Donald Trump’s top pick to replace chief of staff… Continue reading

Swath of South faces wintry mess: Snow, sleet, freezing rain

CHARLOTTE, N.C. — A massive storm brought snow, sleet, and freezing rain… Continue reading

‘I killed my best friend’: Opioids’ fatal grip on mayor, pal

MOUNT CARBON, Pa. — Janel Firestone found her son — the 24-year-old,… Continue reading

Brothers, 20, face second-degree murder charge in death of teen: police

MISSISSAUGA, Ont. — Police west of Toronto say two brothers have been… Continue reading

A young mayor, his friend, and a fatal attraction to opioids

MOUNT CARBON, Pa. — Janel Firestone found her son — the 24-year-old,… Continue reading

GM fights to retain key tax credit amid plant closing plans

WASHINGTON — General Motors is fighting to retain a valuable tax credit… Continue reading

TTC union asks provincial government to step in on transition to Presto

TORONTO — The union representing transit workers in Canada’s most populous city… Continue reading

Small pot growers find roadblocks on path to microcultivation licences

Yan Boissonneault’s daughter was turning blue. Without warning, his baby had stopped… Continue reading

Most Read