Husky Energy approves two new $350-million heavy oil facilities
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: December 4, 2017 | Last Updated: December 4, 2017 4:38 PM CST
Husky Energy Inc.’s Edam East project near Lloydminster. JAMES WOOD / LLOYDMINSTER MERIDIAN BOOSTER
A year after it committed $1 billion to build three steam-assisted heavy oil extraction plants in western Saskatchewan, one of Canada’s largest energy companies says its board has approved two more of the facilities at a combined cost of $700 million.
Husky Energy Inc.’s decision to green light the plants — to be built at Westhazel, near Mervin, and Edam — is part of its broader strategy to approve two plants per year “for the foreseeable future,” according to a spokesman.
“That can’t continue endlessly, of course, but we do have a good pipeline of projects that we have on the horizon and we have outlined spending plans to bring forward two per year going forward,” Mel Duvall said Monday.
Each of the 10,000-barrels-per-day plants is expected to create between 250 and 300 construction jobs, plus around 30 full-time permanent positions once they begin production, which is expected in 2021, Duvall said.
The Calgary-based company currently has four “thermal” plants under construction — Rush Lake 2, Dee Valley, Spruce Lake North and Spruce Lake Central — plus an additional four operating in the province: Rush Lake, Edam East, Edam West and Vawn.
Part of its strategy of shifting production to “low sustaining capital” operations, Husky’s Lloydminster-area plants feed its upgrader in the border city, which converts heavy crude into the synthetic oil needed to produce diesel and gasoline.
“All the signs are right for these projects,” Duvall said. “They’re bite-sized so it’s not like taking on a multi-billion-dollar oil sands plant … They’ve just been very good for us.”
Duvall said many of Husky’s employees in the region live in North Battleford. The mayor of the city of 14,000 said Monday that the company’s current and planned projects in the area are “incredibly positive” news.
“There are a lot of jobs here that are generated by just the construction alone,” Ryan Bater said. “When the Edam and Vawn plants went up, that was a big deal for our community. And it continues to be because we have those employees and their families living here.”
Saskatchewan Chamber of Commerce CEO Steve McLellan said that while it’s difficult to determine the exact economic impact of each plant, Husky’s plan will benefit local hotels, restaurants and other businesses as well as manufacturers and equipment distributors in Saskatoon.
“This demonstrates confidence and that should send good vibes across the communities, small and large,” he said.
Late last week, Husky reported an uncontrolled steam release at its Edam East thermal plant, which began production in 2016. No one was injured; the company said a “small amount” of oil escaped. Duvall said the leak, which was contained, will not affect the company’s plans.
“Something like this shouldn’t happen, and of course we’re going to undertake a thorough investigation and determine exactly what happened and put in steps to make sure it doesn’t happen again. But … we have great confidence in the attractiveness of these projects.”
Husky previously spent more than $100 million cleaning up a pipeline spill that dumped around 225,000 litres of crude into the North Saskatchewan River near Maidstone in July 2016.