Cenovus Energy expects to realize continued production growth from its conventional heavy oil wells in the Lloydminster region.
The company is coming off an active third quarter with 20 new wells drilled and production increases expected from this segment of the business in 2025.
Conventional oil prospects were one of the highlights of Cenovus’ third quarter conference call on Oct. 31 touched on by Keith Chiasson, executive vice-president and chief operating officer.
He called conventional oil an exciting opportunity identified during the company’s investor day in 2024.
“We are very active in the region as we speak with numerous drilling rigs executing those multilateral wells. It really opens up the resource for us,” said Chiasson.
The drilling targets the Mannville formation with Cenovus being one of the largest land owners in the Lloyd region.
The drilling area is also connected through the company’s midstream business into the Lloydminster downstream upgrader and refinery.
“So, pretty excited about what’s happening in heavy conventional oil. We’re active in drilling,” said Chiasson.
“You should start seeing production ramping from that region in the back half of this year into 2025 as per one of the opportunities we laid out for growth across our portfolio.”
Third quarter production from Lloydminster conventional heavy oil assets was 16,300 barrels a day with Lloydminster thermal production 109,400 bbls/d, both slightly below the prior quarter.
Total upstream production in the quarter amounted to 771,300 barrels of oil equivalent per day, down from 797,000 a year earlier.
The total downstream throughput was 642,900 bbls/d compared with 664,300 in the same quarter last year.
Crude throughput at the Lloyd refinery was 99,400 bbls/d in the third quarter, compared with 53,800 in the previous quarter when a major turnaround took place at the Lloydminster Upgrader.
A third-quarter turnaround also took place at the company’s Lima refinery in the U.S., leading to targeted investments at both sites to address historical reliability issues.
Cenovus president and CEO, Jon McKenzie, told the call they have addressed coker integrity issues at both sites.
Crews also completed equipment renewal work on the fluid catalytic cracker in Lima in the quarter, positioning both sites for improved operating performance and profitability.
McKenzie says they are firmly focused on improving the competitiveness of the U.S. refining business by improving asset reliability, lowering cost structure and capturing more value from the commercial opportunities across the network.
“This work is progressing at a pace with an absolute sense of urgency,” he said.
“Coming out of the turnaround in Lloydminster, we’ve seen excellent reliability. We expect to see the same coming out of the outage in Lima and we continue to make progress.”
“We’re attacking this at a reliability level, a commercial level and a cost level.”
McKenzie also says the company expects to spend about $4.5-$5 billion on capital expenditures in 2025 on growth projects that should be mostly completed next year.
“We’ll come out with a formal budget in December. We see a capital ramp down after that with growth projects coming on to production,” he said.
McKenzie also noted the third quarter was the first quarter of operations for the Trans Mountain Pipeline (TMX), which has provided additional capacity and access to new global markets for their crude.
He says it’s had a positive impact, not only for Cenovus, but the whole Canadian economy.
“We are seeing the benefits of a narrow, less volatile WCS (Western Canadian Select) differential which strengthens the realized price for all Canadian oil production,” said McKenzie.
“TMX shipments has gone well and we have successfully ramped up to full contracted rates.”
Cenovus also reported a profit of $820 million down from the $1.6 billion a year ago due as revenue dipped.
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