Husky Energy Inc. has achieved first oil at the Spruce Lake Central thermal project in Saskatchewan and is moving towards start-up of the Liuhua 29-1 field at the Liwan Gas Project.
Spruce Lake Central, the company’s sixth 10,000-barrel-per-day thermal bitumen project since 2015, has now been completed safely, on schedule and on-budget with enhanced COVID-19 health protocols in place.
In the Asia Pacific region, the tie-in of the Liuhua 29-1 field at the Liwan Gas Project is now complete, with first gas production and sales expected early in the fourth quarter.
“Both Spruce Lake Central and the Liuhua 29-1 field are expected to generate immediate strong free cash flow at current pricing as they come onstream,” said CEO of Husky Energy Rob Peabody on Wednesday.
“Our portfolio of lower-cost, higher-margin projects reinforces our resilience in a challenging market environment.”
Spruce Lake Central began steaming in the second quarter of 2020, and is planned to ramp up to full production over the next couple of months.
Husky’s Saskatchewan thermal projects are directly linked to its Lloydminster Upgrader, Asphalt Refinery and Midwest U.S. refineries, with access to secure pipeline capacity and ample storage to maximise available margins. They are also not subject to the government-mandated production quotas that remain in place in Alberta.
Located approximately 300 kilometres southeast of the Hong Kong Special Administrative Region, the Liwan Gas Project was the first deepwater gas project offshore of China and delivered first production in 2014, seven years after the initial discovery.
The Liwan 3-1 and Liuhua 34-2 fields share a subsea production system, subsea pipeline transportation and onshore gas processing infrastructure.
Husky has a 49 per cent interest and operates the deep-water infrastructure, including the subsea wells, deep-water flowlines, control systems and manifolds, and the mono-ethylene glycol (MEG) unit on the shallow-water platform.
Husky’s partner CNOOC Ltd. operates the shallow water facilities, including the platform, subsea pipeline to shore and the onshore Gaolan Gas Terminal. The terminal extracts condensates and liquids, and compresses and moves the gas to commercial markets in mainland China.
Liuhua 29-1 is the third deepwater field at Liwan. Husky has advised that it has advanced the Liuhua 29-1 field to mechanical completion ahead of schedule, below budget and despite the challenges of the COVID-19 pandemic. First production and gas/liquids sales are expected to start by November.
Target production is 45 mmcf/day of gas and 1,800 bbls/day of liquids when fully ramped up, reflecting Husky’s 75 per cent working interest plus exploration cost recovery volumes.
