Husky sets $2.85 billion capital budget

By OGJ editors
HOUSTON, Dec. 22 -- Husky Energy Inc. has allocated $2.85 billion (Can.) for capital expenditures in 2006.

Of $2.2 billion for upstream projects, $1.5 billion is for work in Western Canada other than oil sands operations, for which the budget is $230 million.

The Western Canada work includes gas exploration in Alberta and British Columbia, further heavy oil development in Alberta and Saskatchewan, and the drilling of two wells to appraise the Summit Creek B-44 oil discovery and to test a prospect in the Northwest Territories (OGJ, Oct. 24, 2005, Newsletter).

Oil sands spending will include $145 million to complete construction of the 30,000 b/d Tucker Oil Sands Project, which will begin production by yearend 2006 (OGJ, Aug. 2, 2004, Newsletter). The company has allocated $60 million for initial development at the 200,000 b/d Sunrise Oil Sands Project near Fort McMurray, which received regulatory approval earlier this month.

Husky earmarked $350 million to drill and complete a fourth production well in White Rose oil field off eastern Canada, which could boost production to an estimated peak of 100,000 b/d by mid-2006. And it plans a delineation well of the nearby North Avalon pool.

As part of an international budget of $140 million, Husky plans to spend $75 million on engineering and development plans for Madura BD gas field off Indonesia.

Midstream and refined product activities, budgeted for a combined $600 million, will include completion of debottlenecking work at the Lloydminster upgrader, which will increase throughput to 82,000 b/d from 77,000 b/d. And $90 million will be used to expand the related heavy oil pipeline system in a project that includes construction of a connection to the Tucker project near Cold Lake, Alta.

Husky also will upgrade the 10,000 b/d Prince George refinery to enable it to produce ultralow-sulfur diesel and to raise capacity to 12,000 b/d by mid-2006. Husky will spend $120 million to build a 130-million l./year ethanol facility at Minnedosa, Manitoba.

Next year, Husky expects to produce 360,000-390,000 boe/d of oil and gas, including 103,000-116,000 b/d of light oil and NGL, 29,000-32,000 b/d of medium oil, 115,000-120,000 b/d of heavy oil, and 680-730 MMcfd of natural gas.


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