As part of its second-quarter earnings report last week, Canadian Natural Resources (CNRL) updated investors on its plans for organic production growth out of its oil sands assets.
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A DECENT QUARTER FOR THERMAL PRODUCTION
Thermal in-situ production averaged 234,000 bbl/day in the second quarter, down 4% from the same quarter last year. The decline was blamed on a maintenance outage at Primrose. Thermal operating costs averaged $14.59 a barrel in Q2, down 23% from the previous quarter.
NEW WELLS AT PRIMROSE
Two new well pads at Primrose will add 25,000 bbl/day of bitumen production, boosting output to 100,000 bbl/day in the third quarter of this year.
The company is currently piloting the addition of solvent in the more mature steam flood area, which could potentially reduce steam requirements by up to 45%. The pilot program is due to be completed before the end of this year. CNRL says the results have been positive so far.
Primrose uses cyclic steam stimulation (CSS) technology, and has a nameplate capacity of 140,000 bbl/day.
SOLVENT BEING TESTED AT KIRBY
A new well pad at Kirby will also increase output by 15,000 bbl/day this year, bringing the Q3 forecast to 65,000 bbl/day.
Kirby North and South are both steam-assisted gravity drainage (SAGD) facilities, with a combined nameplate capacity of 80,000 bbl/day.
After a successful pilot at Kirby South, CNRL also says it has completed engineering of a full-scale solvent SAGD pad at Kirby North. Solvent injection is scheduled to commence in mid-2024. The company says solvent-addition technology has the potential to be applied at some of its other thermal in-situ assets.
Combined, Primrose and Kirby will add 30,000 bbl/day of production from the end of last year, boosting total thermal in-situ output to 280,000 bbl/day in the third quarter. The company also says it expects to put five new pads into service next year — three at Kirby and two at Jackfish.
PLENTY OF SPARE CAPACITY ALREADY INSTALLED
Primrose, Kirby and Jackfish have a combined installed production capacity of 340,000 bbl/day, about 95,000 bbl/day of which is not being fully utilized.
The company says the use of solvent technology could potentially boost output by more than 185,000 bbl/day. Coupled with future project expansions, total thermal output could rise by as much as 300,000 bbl/day at some point in the future.
ON-GOING OPTIMIZATION AT HORIZON
CNRL says it completed tie-ins of two furnaces at the Horizon Upgrader, as part of an on-going reliability enhancement project. Once the furnaces are operational, Horizon’s synthetic crude oil (SCO) production capacity will increase by 5,000 bbl/day to 255,000 bbl/day.
The reliability enhancement project aims to extend Horizon’s annual maintenance shutdowns to every other year, boosting production capacity by 14,000 bbl/day. All upgrades are expected to be put into service by 2025.
Including CNRL’s non-operated 70% stake in the Scotford Upgrader, the company’s total SCO production capacity will rise to 480,000 bbl/day this quarter.
A ROUGH QUARTER FOR SCO PRODUCTION
SCO production averaged just 355,000 bbl/day in the second quarter, down over 100,000 bbl/day from the previous quarter due to maintenance outages at both Scotford and Horizon. However, the company says it had a very strong July, averaging 513,000 bbl/day of SCO for the month.
CNRL increased its mining and upgrading capital budget by approximately $130 million, to an estimated $1.9 billion for the full year. The increase was attributed to added scope and higher third-party service costs.
The company’s full-year 2023 capital spending program was increased 4% to approximately $5.4 billion. Total production guidance, including gas production, was left unchanged at roughly 1.35 million boe/day.
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