UPDATE 2-Cenovus slows Foster Creek expansion; earnings disappoint

Thu Feb 13, 2014 4:55pm EST
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By Julie Gordon

Feb 13 (Reuters) - Cenovus Energy Inc said on Thursday it will take longer than expected to bring its Foster Creek oil sands project in Alberta to its full production rate as the company delayed optimization work until after an expansion is completed.

The Calgary-based energy company also reported fourth-quarter operating profit below analyst estimates, as higher output at its Christina Lake oil sands project was offset by a cut in production and higher costs at Foster Creek.

Foster Creek is Cenovus' largest oil sands asset, with five phases already producing and three more set to come online over the next two years.

Cenovus had originally planned to optimize phases F, G and H individually as soon as they were complete, which would have boosted output for the expansion project past its nameplate capacity of 90,000 barrels per day (bpd) to 125,000 bpd.

The company will now complete the three phases through 2016, and then spend another three years fine tuning all eight phases of the project.

"We're still confident in the 125,000 barrel a day increment over time, it's just a question of when we choose to do the optimization," Chief Executive Brian Ferguson said in an interview.

Cenovus' share of production at Foster Creek was 52,419 bpd in the fourth quarter, down 11 percent from the year-ago period. ConocoPhillips owns half of the Foster Creek and Christina Lake projects.   Continued...