Husky Energy to spend $1 billion on new heavy oil projects in Saskatchewan

Husky Energy to spend $1 billion on new heavy oil projects in Saskatchewan

ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: December 14, 2016 | Last Updated: December 14, 2016 6:00 AM CST

 Maidstone’s mayor says he is thrilled that Husky Energy Inc. plans to invest more than $1 billion into three new steam-assisted heavy oil extraction plants in west-central Saskatchewan over the next several years.

The town of 1,300 has been deeply affected by crashing oil prices, with jobs lost, welfare cheques distributed and once-full homes for sale, and the prospect of almost 100 new full-time energy industry jobs in the region is “huge,” Brennan Becotte said.

“We have a lot of people that have lost their jobs — oil people and oil companies — and any positive growth at this point is welcome.”

The Calgary-based company said this week that it plans to build three $350 million thermal extraction plants in the region as part of its ongoing transition to “low sustaining capital” operations.

At its last meeting, its board of directors sanctioned one of the 10,000-barrels-per-day plants at Dee Valley north of Maidstone and two near the Hamlet of Spruce Lake, northeast of Turtleford.

The plants, which are “very much like” the company’s steam-assisted operations at Edam and Vawn, are expected to come online in 2020 and employ 30 people each, Husky spokesman Mel Duvall said in an email.

Construction of a fourth plant, the company’s second near Rush Lake in southwest Saskatchewan, is also underway, and Husky is planning for a massive expansion at its asphalt refinery near Lloydminster, Duvall said.

“Quite a few (of our employees) choose to live in the communities near where the plants are,” he said, noting that North Battleford is fast becoming a hub for Husky employees in the province.

Despite contending with the aftermath of a major pipeline spill into the North Saskatchewan River this summer, Husky appears committed to expanding its heavy oil operations in west-central Saskatchewan and northeastern Alberta.

The company said in October that it could build an additional 17 thermal plants in the region over the coming years, a continuation of the strategy former Husky president and CEO Asim Ghosh described as a “resilient growth engine.”

Becotte said rising oil prices — on Tuesday, West Texas Intermediate was trading at US$53 per barrel, up from US$37 at the start of 2016 — bodes well for Maidstone and other oil-dependent communities across the province.

Husky is not the only Alberta-based energy company to boost its capital expenditure plans in Saskatchewan as oil prices climb.

Cenovus Energy Inc. says it plans to boost its spending on conventional oil extraction in Alberta and Saskatchewan to between $275 and $325 million in 2017, up from its 2016 guidance of between $150 and $175 million.

Crescent Point Energy Corp. said last week that it plans to spend 25 per cent of the $1.45 billion it allocated for capital expenditures next year in southwest Saskatchewan, plus 51 per cent in the Williston Basin, which extends into southern Saskatchewan.

Energy and Resources Minister Dustin Duncan said the prospect of increased spending in Saskatchewan’s energy sector is good news for the province, which faces a “very challenging” $1 billion budget deficit, and also for people thrown out of work in the oil crash.

According to Statistics Canada, Saskatchewan shed 10,000 jobs over the last 12 months. Duncan said while not every energy sector job will be replaced overnight, companies are better positioned to profit as oil hovers around US$50 per barrel.

“That’s going to have a positive impact on people that are on the service, supply side (and) on the drilling side,” Duncan said. “I think that communities are going to start to see the effects of this pretty soon.”

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on December 14, 2016, in economic impact, oil, political. Bookmark the permalink. Leave a comment.

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