Husky charts a path to growth in Western Canada
Husky Energy presented their 5-year growth plan this week at their annual 2017 Investor Day in Toronto, ON.
The company is targeting an annual production growth rate of 4.8%, increasing output to almost 400,000 boe/day by 2021. Much of that increase will come from the Lloyd and Tucker Thermal Projects, the Sunrise oil sands SAGD facility and offshore gas development in China.
Husky expects to produce 320,000 to 335,000 boe/day this year.
Bitumen production averaged 120,000 bbl/day at the end of 2016, a 55% increase from the previous year. The company expects to add another 40,000 bbl/day of new thermal bitumen capacity over the next five years, including:
- 10,000 bbl/day from Rush Lake 2, currently under construction, and
- three additional 10,000 bbl/day thermal bitumen projects at Dee Valley, Spruce Lake North and Spruce Lake Central near Lloydminster, Saskatchewan.
Husky has identified another 14 Lloyd thermal developments that could potentially come online sometime in the future.
Thermal bitumen production at Tucker is now averaging about 23,000 bbl/day, ramping up towards 30,000 bbl/day in 2018.
Gross bitumen production at Sunrise is currently about 40,000 bbl/day. 14 new well pairs are being tied-in and should begin producing oil by the end of 2017. Sunrise is a 50/50 joint venture with BP.
Husky says it is working towards lowering its upstream operating costs from about $14.25/bbl this year to less than $12 by 2021. About 70% of the company's Western Canada production is gas-weighted, providing a hedge against rising gas prices.
In order to improve integration between upstream and downstream operations, Husky is also investing heavily on increasing margins and operating flexibility at its 3 refineries:
- The Lloydminster Upgrader and asphalt refinery will likely see asphalt processing capacity double to 60,000 bbl/day.
- Heavy oil processing capacity will increase from 10,000 to 40,000 bbl/day at the Lima, Ohio refinery by the end of 2018.
- The Toledo Refinery, also in Ohio, is being upgraded to process up to 65,000 bbl/day of high-TAN crudes, which will allow it to process more volumes from Sunrise and improve margins by US$3/bbl.
Capital spending guidance for the year has been reduced by $100 million to about $2.5-2.6 billion. The company is banking on an average WTI price of US$50 this year, rising to US$60 by 2019.
HUSKY ENERGY HUSKY TO PRESENT FIVE-YEAR GROWTH PLAN AT INVESTOR DAY MAY 30, 2017
HUSKY ENERGY INVESTOR DAY PRESENTATION MAY 30, 2017