Report: Canada’s Christina Lake project remains top priority despite low prices

Cenovus Energy’s Christina Lake development continues to be a key project with the operator, making it an investment priority even as oil prices are plummeting, according to a GlobalData report.

The Christina Lake project, located in northeast Alberta, Canada, accounts for approximately 40% of Cenovus Energy’s total oil production at 150,000 barrels per day (bpd) of oil.

Titled ‘Canada Christina Lake (Cenovus Energy Inc.) Project Panorama – Oil and Gas Upstream Analysis Report’, the report states that the project is estimated to achieve a total installed capacity of 210,000bpd by the end of 2016.

Production from the first phase of the oil sands in-situ project started in 2002, while production from its sixth phase, Phase F, will add 50,000bpd to the total production and is expected to begin this year.

The remaining net present value of the project is estimated to be positive at $940m with assumptions that the oil price is $30.09 per barrel and the discount rate is 10% from 2018. Meanwhile, the project has also witnessed a 28% decline in operating costs that has been brought about by a decrease in fuel prices.

A change in operating strategy, accompanied by improvements in steam injection monitoring, has also contributed to the low operating costs.

The GlobalData report mentions that the low-price environment coupled with high operating costs has resulted in the suspension of a number of new oil sands projects within the Athabasca region.

The multi-phased Christina Lake project has also been affected by the global oil prices with its Phase G being abandoned after it was planned to commence production from 2017. Investment in the project was also slashed by 35% between 2015 and 2016.