Cenovus Energy Inc will develop the Grand Rapids thermal oil sands project, located in northern Alberta, in several phases
The Alberta Energy Regulator has given the thumbs-up to Canadian oil producer Cenovus Energy Inc (TSE:CVE, Mkt cap 23.78B, P/E 35.97, Div/yield 0.27/3.39, EPS 0.87, Shares 756.51M) to develop a new oil sands project with an expected production capacity of up to 180,000 barrels of oil per day. The news sent the company’s stock 1.8% higher in Toronto on Friday, closing at C$30.50 after touching C$30.63 earlier in the session.
The Grand Rapids thermal oil sands project is located in northern Alberta and will be developed in several phases. It is the company’s fourth approved oil sands project and is expected to have a life of 40 years. Calgary-based Cenovus said it would decide on when to start developing the field later in 2014.
Cenovus has been producing oil in the area for over 15 years from the Wabiskaw formation and has operated a steam-assisted gravity drainage (SAGD) pilot project at the site for more than three years. The oil producer said that it has so far drilled around 180 stratigraphic test wells at Grand Rapids to qualify for the permit and support its development plans. The results have confirmed that the reservoir is “very consistent.”
Cenovus’s other oil sands projects include Foster Creek, which has a production capacity of some 110,000 barrels of oil per day, and Christina Lake, which has a daily output of 130,000 barrels of oil. The company plans expansions at both fields and expects that its third project, Narrows Lake, will start production in 2017. Cenovus owns these three projects together with ConocoPhillips.
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