First oil achieved at phase F
CALGARY, Sept. 17, 2014 /CNW/ - Cenovus Energy Inc. (TSX: CVE) (NYSE:
CVE) 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 (bbls/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 bbls/d. Phases G and H are under
construction and are expected to add another 30,000 bbls/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 bbls/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 bbls/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 & 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 bbls/d
as volumes were impacted by scheduled maintenance on Cenovus's
cogeneration facility. August volumes averaged 119,000 bbls/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 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.
This document contains certain forward-looking statements and other
information (collectively "forward-looking information") about our
current expectations, estimates and projections, made in light of our
experience and perception of historical trends. Forward-looking
information in this document is identified by words such as
"anticipate", "believe", "expect", "plan", "forecast", "target",
"schedule" or similar expressions and includes suggestions of future
outcomes, including statements about our growth strategy and related
schedules, projections contained in our 2014 guidance, forecast
operating results, projected capital costs, expected future production,
including the timing, stability or growth thereof and expected increase
in production capacity through expansion and optimization projects.
Readers are cautioned not to place undue reliance on forward-looking
information as our actual results may differ materially from those
expressed or implied.
Developing forward-looking information involves reliance on a number of
assumptions and consideration of certain risks and uncertainties, some
of which are specific to Cenovus and others that apply to the industry
generally. The factors or assumptions on which this forward-looking
information is based include: assumptions disclosed in our current
guidance, available at cenovus.com; our projected capital investment levels, the flexibility of our
capital spending plans and the associated source of funding; our
ability to obtain necessary regulatory and partner approvals; the
successful and timely implementation of capital projects or stages
thereof; our ability to generate sufficient cash flow from operations
to meet our current and future obligations; and other risks and
uncertainties described from time to time in the filings we make with
securities regulatory authorities.
The risk factors and uncertainties that could cause our actual results
to differ materially are identified in our Second Quarter Report and
remain accurate as of the date of this release.
For a full discussion of our material risk factors, see "Risk Factors"
in our most recent Annual Information Form/Form 40-F, "Risk Management"
in our current and annual Management's Discussion & Analysis and risk
factors described in other documents we file from time to time with
securities regulatory authorities, all of which are available on SEDAR
at sedar.com, EDGAR at sec.gov and our website at cenovus.com.
TM denotes a trademark of Cenovus Energy Inc.
CENOVUS ENERGY INC.
Cenovus Energy Inc. is a Canadian, integrated oil company. It is
committed to applying fresh, progressive thinking to safely and
responsibly unlock energy resources the world needs. Operations include
oil sands projects in northern Alberta, which use specialized methods
to drill and pump the oil to the surface, and established natural gas
and oil production in Alberta and Saskatchewan. The company also has
50% ownership in two U.S. refineries. Cenovus shares trade under the
symbol CVE, and are listed on the Toronto and New York stock exchanges.
Its enterprise value is approximately $30 billion. For more
information, visit cenovus.com.
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SOURCE: Cenovus Energy Inc.
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