Husky Energy Studies Incorporating an Upgrader into its Sunrise Oil Sands Project

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Husky Energy Incorporated (TSX:HSE) (Calgary, Alberta) is conducting an internal study into the possibility of incorporating an onsite upgrader into its planned Sunrise oil sands development project. The proposed upgrader would convert the bitumen produced from oil sands into a synthetic crude oil product that could fetch a price of just a dollar less than West Texas Intermediate Crude Oil. The upgrader would be based on ExxonMobil's (NYSE:XOM) (Irving, Texas) Flexicoker technology and would be constructed in multiple phases in two differing scenarios.

The first scenario envisions the construction of a 240,000-barrel-per-day upgrader that would be constructed in three phases of 80,000 barrels per day each. The second scenario lines out a four-phase construction scheme with a capacity over 250,000 barrels per day. The synthetic crude exiting the back end of the facility would have an Api weigh of roughly 37 Api and would be exported through a planned pipeline lateral to interconnect with Enbridge Pipelines for transport south.

The total capital cost of the project has risen to the neighborhood of $7.5 - $ 8.5 billion dollars, when the upgrader is included in the four 50,000-barrel phases of the SAGD production facility and the 150MW Cogen that is proposed for the second SAGD phase. Husky hopes to receive its regulatory approvals for the SAGD portion of the project by the fourth quarter of 2005. Husky will seek an engineering company for the front end engineering and design (FEED) phase some time in early to mid-2006 for phase I of the SAGD operation. Construction on the SAGD portion of the project will begin in 2007, with first production expected in 2009. As for the upgrader, Husky will make a production decision in late 2005 and expects to begin engineering in late 2006, with E+P+C selection in 2007. Construction on the upgrader is planned for mid-2008, and completion is slated for 2010. Final phased ramp-up to 200,000 plus barrels per day of synthetic crude production is expected to be realized between 2013 and 2015. With the 2.25 billion barrels of resource in place, the production and upgrading facility will have a predicted production lifespan of over forty years.

Due to the margin returns on selling diluted bitumen to the market, it would not be unreasonable to expect many more of the bitumen project sponsors in the area to begin examining incorporating an upgrader into their projects, as well.

View Project Report - 56000919 56000849 56000852 56000858

For more information on this project see - Husky Energy Dives into Massive Alberta Oil Sands Project

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