Wednesday, November 14, 2012

Husky's Sunrise on track

The Sunrise central plant. Stolen from the Husky website.
Here's an article in the Edmonton Journal from a couple weeks ago. It talks about Husky's Sunrise SAGD project 60km North East of Fort McMurray.

The $2.5 billion project is apparently on track and on budget. It's intended to produce 60,000 barrels a day, and it's a 50-50 joint venture with BP. Sounds like Husky, and maybe other operators, are getting a better grip on costs and schedules, which both experienced major overruns in various projects not so long ago.

Hopefully this all goes well for Husky. Of course no discussion about their SAGD adventures would be complete without a mention of Tucker. Although Husky puts a brave face on it in their website, that property was something of a disaster. To my knowledge it has never produced more than 10,000 barrels per day, out of the planned 30,000, and for much of its early life it was at about 5,000. It has an SOR of between 5 and 6, which means it's gotta be barely economic to operate, or at least will be if gas prices bounce back. What's more, because they were the 100% owner and operator, nobody was there to share the misery with Husky.  About the best thing Husky can say about Tucker is that it was a great learning experience for Sunrise, as well as the industry at large. If you can't be a shining example, may as well be a grave warning to all who follow I guess.

My issue with this "learning experience" angle is that their main problem at Tucker - that they committed huge amounts of capital to the project before knowing how well they could produce from it - was a failure of common sense, not some obscure engineering process that could be learned. Who puts $500 million into a field without a pilot? Well nobody does now, but in fairness maybe that's because Tucker showed everyone how badly they can get burned.

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