Cenovus Energy Inc., Calgary, said it has achieved first heavy oil production last week from Phase E at its Christina Lake thermal project in Alberta and that the company's overall oil sands production climbed 17% in the second quarter.
Combined oil sands production at Foster Creek and Christina Lake averaged nearly 94,000 b/d net in the quarter, up 17% from a year ago, while total oil production averaged 171,000 b/d, a 10% increase.
Christina Lake output climbed 35% to more than 38,000 b/d, due mainly to ramp-up of Phase D and despite the first full planned turnaround at the facility, and the company expects to bring on a new phase of production there in each of the next several years.
Discovered bitumen initially in place has increased 66% since 2009 to 93 billion bbl, reflecting the success of the company's stratigraphic drilling program in converting undiscovered resource inventory.
Natural gas production averaged 536 MMcfd, down 10%.
Cenovus's conventional oil assets, including Pelican Lake, were steady at more than 77,000 b/d. This slight increase was partly due to successful well performance related to the company's current drilling program to develop tight oil opportunities in Alberta.
Work to expand infill drilling and the polymer flood program at Pelican Lake is proceeding, resulting in average production of nearly 24,000 b/d in the quarter, 7% higher than the same period a year earlier.
Operating cash flow from refining was $316 million in the second quarter, an 8% decrease when compared with the same period a year earlier. The narrowing WTI to WCS differential that benefited the company's upstream operations resulted in increased feedstock costs at its refineries. Lower refined product output due to an unplanned hydrocracker outage at Wood River, Ill., in June also contributed to the decline.
Rigorous efforts to identify new markets for oil included participation during the quarter in the open season for TransCanada's Energy East pipeline project. Cenovus is awaiting the results of that process.
Cenovus plans to transport as much as 50% of its oil production through firm commitments over the long term. At this point, the company has made commitments to various pipeline projects to move up to 175,000 b/d to the West Coast and up to 150,000 b/d to the US Gulf Coast. This transportation plan includes growing rail capacity to move up to 10% of production over the long term.
In the second quarter, Cenovus used rail to transport about 7,900 b/d to the East Coast and to markets in the US. The company expects to move 10,000 b/d on rail by yearend and up to 30,000 b/d by yearend 2014.
