Cenovus profit beats on higher Christina Lake oil sands production
CALGARY, Alberta (Reuters) - Canadian oil sands producer Cenovus Energy Inc (CVE.TO: Quote), which on Wednesday reported a higher-than-expected first-quarter profit, said it has acquired mothballed processing facilities from a Total-owned oil sands site, and will use the equipment at its planned Grand Rapids project.
Cenovus, which currently has two oil sands projects, said the newly acquired facilities will be moved to the Grand Rapids site from Total's (TOTF.PA: Quote) Josyln oil sands development and will be used to process the first 10,000 barrel per day phase of what will eventually be a 180,000 bpd development.
"They have been well maintained," John Brannon, chief operating officer for Cenovus, said on a conference call.
"The exact price of the transaction is confidential, so we have not disclosed that. But we think it is a huge opportunity for us to start this project at Grand Rapids with those facilities. It will help us keep our initial costs down and we think we can deliver a very good project."
The acquisition of the central processing facility, which produces steam and processes oil and water, means the first phase will be smaller than Cenovus' initial plan for a 30,000 bpd development. The company said it will tweak future expansions to come up to the project's final capacity.
Total ended thermal oil sands production at its Joslyn site after an over-pressurized well blew up, creating a crater at the northern Alberta site. A mining project is still planned at Joslyn by Total, part of a joint venture between the company and Suncor Energy Inc (SU.TO: Quote).
Cenovus said it expects the first phase of Grand Rapids, a thermal development where steam and solvents will be pumped into the ground to liquefy tarry bitumen deposits, to begin producing oil in 2017.
The company's profit jumped to C$247 million ($225.25 million), or 33 Canadian cents per share, in the quarter ended March 31, from C$171 million, or 23 Canadian cents per share, a year earlier. Continued...