Outgoing Husky Energy CEO John Lau is moving to his native Hong Kong, where he will head up the company's growing Asian business.Jeff McIntosh
Husky Energy Inc. and BP PLC are ready to proceed with their $2.5-billion Sunrise oil sands project, the partners said Wednesday, after cutting costs for the development by more than $1-billion.
Husky said it completed design work for Sunrise's first 60,000 barrel per day phase and is ready to seek bids from firms looking to build needed facilities for the thermal project 60 kilometres northeast of Fort McMurray, Alta.
Sunrise is the second major oil sands project announced in as many days, coming after ConocoPhillips Co. and Total SA said they planned to quadruple output from their Surmont oil sands site to 110,000 barrels per day.
Canada's oil sands, which contain the largest crude reserves outside the Middle East, are reviving after billions of dollars worth of projects were delayed, deferred or cancelled outright because of the financial crisis, rising costs and falling oil prices.
Indeed, joint-venture partners Husky and BP stalled the Sunrise project last year, slashing development spending as they looked for ways to cut costs.
Husky, controlled by Hong Kong billionaire Li Ka-shing, said that it lowered Sunrise's price tag by tweaking its design for the project.
"Over all, the cost estimate for Phase 1 has been reduced by more than $1-billion through design optimization," John Lau, Husky's chief executive officer, said in a statement.
Husky had originally estimated costs for the project at between $3.8-billion and $4-billion.
Plans for Sunrise call for a steam-assisted gravity drainage project, where steam is pumped into the earth to loosen up the tarry bitumen in the oil sands so it can be pumped to the surface in wells.
Husky and BP also co-own a refinery in Toledo, Ohio, which is targeted for $2.5-billion (U.S.) of retooling work so it can run the oil sands-derived crude.
The partners already have the needed approvals in place but have not yet given a the project a final green light. However, Husky said it expects production at the site, which contains an estimated 3.7 billion barrels of bitumen, to begin in the second half of this year, with production expected in 2014.
Sunrise is expected to be expanded to produce 200,000 barrels a day and Husky said it could reach full output around 2020.