Report on cause of Husky oil spill out Nov. 21; cleanup $90M

  • 8 Oct 2016
  • Saskatoon StarPhoenix
  • ALEX MACPHERSON

Report on cause of Husky oil spill out Nov. 21; cleanup $90M

Husky Energy Inc., spent about $90 million on costs related to the pipeline spill that dumped about 225,000 litres of heavy crude near and into the North Saskatchewan River in July.

The Calgary-based company said Thursday that the cost was calculated as of Sept. 30, and will be incurred by Husky Midstream Limited Partnership (HMLP). Husky has a 35 per cent stake in HMLP, and operates its assets.

“Management believes the costs incurred properly reflect the costs of the incident at this time, however, the overall impact of the incident is subject to estimate,” the company said in a statement issued with its third-quarter financial results.

It remains unclear what caused the pipeline to fail. The company and the provincial government have repeatedly refused to comment on separate and ongoing investigations.

Last week, the province gave Husky an extra 30 days to submit its explanation of what caused the spill after the company said two engineering firms needed more time to complete technical reports. Its report is now expected by Nov. 21.

On Thursday, Husky reported an adjusted third-quarter loss of $100 million, bringing its year-to-date adjusted losses to $649 million. At the same time, it outlined plans to expand its heavy oil operations in Saskatchewan and Alberta.

Husky has previously committed to “low sustaining capital” projects like the Edam East, Edam West and Vawn steam-assisted facilities — which came online in Saskatchewan this year — as a means of maximizing profits amid low prices.

“We have achieved, ahead of schedule, our target of having more than 40 per cent of production generated by low sustaining capital projects by the end of 2016,” Husky president and CEO Asim Ghosh said in a statement.

“And we have many more such projects in the wings,” added Ghosh, who announced on Wednesday that he will retire from the company effective Dec. 5. Current chief operating officer Rob Peabody is expected to take over as president and CEO.

Husky said Thursday it expects to sanction three new 10,000 barrels-per-day projects soon, and that it has identified 17 more — representing 150,000 barrels-per-day of new production — that could be brought on over time.

Husky spokesman Mel Duvall said in an email that those projects — some of which are in Saskatchewan while others are in Alberta — have yet to be sanctioned.

The company’s projects in western Saskatchewan and northeastern Alberta feed its upgrader in Lloydminster, which converts heavy oil into synthetic crude used to produce diesel and gasoline.

“Thermal technology has turned our heavy oil business into a resilient growth engine, with some of the lowest operating costs in the industry at about $7 per barrel,” Ghosh said when Edam West entered production in June.

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on October 28, 2016, in economic impact, miscellaneous, oil, political. Bookmark the permalink. Leave a comment.

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