BlackPearl starts construction on Saskatchewan thermal oil expansion

With debt at zero, BlackPearl starts construction on Saskatchewan thermal oil expansion

By Deborah Jaremko

Feb. 24, 2017, 7:39 a.m.

http://www.jwnenergy.com/article/2017/2/debt-zero-blackpearl-starts-construction-onion-lake-thermal-oil-expansion/

black-pearl

BlackPearl Resources CEO John Festival. Image: Todd Korol/JWN

 

Saskatchewan will soon have another project operating in its growing portfolio of thermal heavy oil operations.

BlackPearl Resources, which used the sale of a royalty interest and cash flow to reduce its debt from $88 million to zero in 2016, has announced it has commenced construction on the second 6,000 bbl/d phase at Onion Lake.

Total estimated capital costs for the project are between $180 and $185 million, or up to about $30,800 per flowing barrel. BlackPearl says it has entered into a fixed price contract for the central processing facility and well pads.

The project is expected to be completed in mid-2018.

“The past two years have been very difficult due to low oil prices; however, we did more than just shut in production, cut costs and survive,” BlackPearl CEO John Festival said in a statement.

“In 2017, we will allocate capital to drilling primary wells and bringing on shut in production, but most importantly, our focus will be on our 6,000 bbl/d Phase 2 expansion at Onion Lake. We have signed a contract to build the facilities for Phase 2 and expect to announce the remaining debt instruments shortly that are necessary to fully fund our capital program.”

Construction of the initial 6,000 bbl/d Onion Lake Phase 1 was completed in May 2015 and deemed commercial five months later.

The project, which uses a modified SAGD process with 35 vertical injectors, one horizontal injector and 13 horizontal producers, reached and exceeded its design capacity in 2016 with operating costs under $10/bbl, BlackPearl says.

During the fourth quarter of 2016, the company sold a gross overriding royalty interest on its Onion Lake property for cash proceeds of $55 million, whereby the company will pay approximately 1.75 percent royalty on production from substantially all of its Onion Lake lands.

In 2016 the company also received regulatory approval for an 80,000 bbl/d commercial project in the Athabasca oilsands at Blackrod, where it has been operating a successful pilot since 2011.

“Long life, low decline production will be the bedrock of our company as we look to the future, which will include the funding and construction of our Blackrod oil sands project,” Festival said.

BlackPearl recorded a net loss of $19.9 million for the year 2016, down from its $46.8 million net loss in 2015.

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on February 24, 2017, in economic impact, oil. Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: