BY RICHARD GILBERT - Cenovus Energy Inc. has received approval from the provincial regulator for the construction of a thermal oilsands facility in northern Alberta, which will expand on the development of a pilot project.
“We’re pleased to have received regulatory approval for our fourth oilsands project,” said Brian Ferguson, Cenovus president and chief executive officer in a press release.
“Developing the Grand Rapids project contributes to our long-term business plan of creating shareholder value by increasing the company’s oil production capacity over the next decade.”
The proposed Grand Rapids project involves the construction of an in-situ oilsands facility about 300 kilometres (km) northeast of Edmonton, Alberta, and about 30 km northeast of the hamlet of Wabasca.
The proposed project is expected to include a central processing site, which will be constructed in three phases and use steam-assisted gravity drainage (SAGD) to recover bitumen.
Construction for Phase A of the project would begin in 2014, with Phase B and Phase C starting in 2017 and 2020 respectively.
Each phase will have a production capacity of 60 000 bbl/d for a total capacity of 180,000 bbl/d.
Production may include the co-injection of solvent with steam.
The steam production facilities will use up to 36 steam generators and four of these are co-generation.
An estimated five initial well pads and 100 initial well pairs will be operating within 12 months of operations start up.
About 3,700 well pairs drilled from 200 well pads would be required over the project’s expected 40-year operation period.
Cenovus expects to make a decision on the timing of development later this year.
Once a decision is made to proceed, Cenovus will be able to rely on existing infrastructure, including roads, power and camps at its Pelican Lake conventional heavy oil operation.
However, the project is expected to require the construction of other related infrastructure including electrical power lines, fuel gas pipelines, produced oil pipelines, and diluent/condensate supply pipelines.
These related infrastructure projects will be applied for separately.
An independent qualified reserves evaluator estimates that Cenovus has contingent resources for the entire Grand Rapids holdings of about at 1.5 billion barrels.
Cenovus drilled their first pilot SAGD well pair in the Grand Rapids formation in the Greater Pelican Region in December 2010.
The pilot evaluated thermal recovery of this large oil resource and in 2011 the company achieved first production.
The pilot will continue to operate, in order to gather additional information about the reservoir.
Cenovus expects to invest between $2.8 billion and $3.1 billion in 2014, which is 10 per cent decrease from 2013.
The company has built a large inventory of regulatory approved projects and is now allocating more of its capital to develop this inventory.
This includes projects now under construction at Foster Creek and Christina Lake. Capital investment at Grand Rapids was $39 million in 2013, down from $65 million in the previous year, primarily due to drilling fewer stratigraphic test wells.