Cenovus gets AER approval for Grand Rapids oil sands project

Cenovus Energy Inc. reported that it has received approval from the Alberta Energy Regulator (AER) for its wholly owned Grand Rapids thermal oil sands project 300 km north of Edmonton in the company’s Greater Pelican Region in northern Alberta.

The Grand Rapids project, which is designed to have a production capacity of 180,000 b/d and a 40-year lifespan, will be developed in multiple phases, Cenovus said.

Cenovus expects to make a decision on the timing of development later this year. Once a decision is made to proceed with Grand Rapids, Cenovus will be able to rely on existing infrastructure, including roads, power, and camps at its Pelican Lake conventional heavy oil operation, it said.

The availability of existing infrastructure is expected to contribute to competitive capital efficiencies for Grand Rapids, the company said. Cenovus and its predecessor companies have been operating and producing oil in the area for more than 15 years from the Wabiskaw formation, which is a deeper geological zone.

The company, which has been operating a steam-assisted gravity drainage (SAGD) pilot project at the site for more than 3 years, said recent production results from the two well-pair pilot have been encouraging. Cenovus plans to continue operating the pilot project to gather additional information on the reservoir.

Stratigraphic test well results have shown the reservoir to be very consistent, which Cenovus believes will provide predictable and reliable long-term production. One hundred eighty stratigraphic test wells have been drilled at the project to support the regulatory application and development plan.

As of December 31, 2013, the independent qualified reserves evaluator (IQRE) estimated Cenovus's best estimate bitumen economic contingent resources for the entire Grand Rapids holdings at 1.5 billion bbl. The IQRE also recognized 78 million bbl of probable reserves. Cenovus expects to be able to convert a significant portion of those probable reserves to prove once the company decides to proceed with the project.

Cenovus currently has two operating oil sands projects, with Foster Creek now producing about 110,000 b/d gross and Christina Lake producing 130,000 b/d gross. Expansions are continuing at both of these projects (OGJ Online, Aug. 2, 2013).

Construction of Phase A at the company’s Narrows Lake project is continuing with production expected to begin in 2017. Cenovus holds a 50% ownership of the Narrows Lake, Foster Creek, and Christina Lake projects with partner ConocoPhillips.

A regulatory application is under review for the Telephone Lake oil sands project, which is wholly owned by Cenovus and has a planned production capacity of more than 300,000 b/d. Cenovus continues to assess other oil sands opportunities within its portfolio for future development.

In addition to the 129,000 b/d net of oil sands production capacity already built at Foster Creek and Christina Lake, Cenovus now has about 365,000 b/d of net oil sands production capacity under construction or with regulatory approval.

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