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Devon's Jackfish SAGD facility exceeds all expectations

Devon's Jackfish SAGD facility exceeds all expectations

Oklahoma-based Devon Energy reported another blow-out quarter for its Jackfish thermal in-situ complex located in the Christina Lake area, 200 km south of Fort McMurray, Alberta.

The Jackfish steam-assisted gravity drainage (SAGD) facility was built in 3 phases, each with a capacity of 35,000 bbl/day. The plant began operation in 2007 with the latest phase put into service in 2014.

PRODUCTION

  • Q1/2016: 126,000 bbl/day for all phases:
    • Jackfish 1 @ 29,300 bbl/day
    • Jackfish 2 @ 31,900 bbl/day
    • Jackfish 3 @ 40,000 bbl/day

A new well pad at Jackfish 1 is expected to help boost production through the second half of the year.

Ramp-up of new well pads also helped Jackfish 2 power to new highs, reaching an average of 38,500 bbl/day for the month of March. Beginning in June, the company will bring the plant down for a 21 day maintenance turnaround which will drop production by 10,000 bbl/day in the second quarter.

Jackfish 3 reported an uptime of almost 100% and has ramped up beyond its nameplate capacity in the first quarter of this year. Devon reported the newest phase has a steam-to-oil ratio of 2.2.

For the full year, the company expects the SAGD operation to average approximately 125,000 bbl/day, a 25% increase over the 2015 average.

JACKFISH UNIT OPERATING COSTS (USD/BOE)

JACKFISH UNIT OPERATING COSTS (USD/BOE)

OPERATING COSTS

  • US$7.87/bbl in Q1/2016, down from US$14.04 in Q1/2015

Operating costs at the SAGD facility continue to decline, falling 66% from the highs of 2015 and down 18% from the previous quarter. The improvement in operating costs are thanks to higher production volumes, lower fuel and labour costs and a more favourable exchange rate. The SAGD facility has a breakeven price of US$35 a barrel for West Texas Intermediate.

Since 2007, the Jackfish operation has generated US$3 billion in cash flow for Devon. The facility produces a heavy bitumen sold directly to market as part of the Western Canadian Select (WCS) blend.

Despite the good performance in their Canadian operations, Devon reported another loss of US$3.1 billion this quarter, the fifth losing quarter in a row. The company lost almost US$21 billion in 2015 and continues to bleed red ink. As of last February, Devon has de-staffed an estimated 20% of its global workforce.

Devon is also a 50% owner of the Access Pipeline, the remaining 50% owned by MEG Energy. Both Devon and MEG have put the pipeline for sale in hopes of raising much needed cash to fund operations. Devon remains confident it should have a buyer by the middle of 2016. In total, Devon is hoping to sell up US$3 billion worth of non-core assets.

ALL FIGURES REPORTED ARE IN US DOLLARS UNLESS OTHERWISE STATED • ALL GRAPHICS COURTESY DEVON ENERGY
Shock and horror continues to unfold in Fort McMurray as 1 million bpd of oil comes offline

Shock and horror continues to unfold in Fort McMurray as 1 million bpd of oil comes offline

Imperial Oil disappoints investors and reports a rare quarterly loss

Imperial Oil disappoints investors and reports a rare quarterly loss

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