Husky oilsands project back on track after being shut down during wildfire

Husky Energy says its thermal oilsands project that was shut down while wildfires swept through the Fort McMurray, Alta., region in May is already back to producing bitumen at its previous level.

The Sunrise oilsands project is producing about 30,000 barrels per day of bitumen, the Calgary-based company said Friday. The $3.2-billion project began construction in 2014, produced first oil in March 2015 and was gradually ramping up to full capacity of 60,000 bpd when the wildfire broke out.

"At Sunrise, the reservoir responded very well to the restart of production in June following the Fort McMurray wildfires," said Rob Peabody, Husky's chief operating officer, during a conference call on Friday. He said all 55 well pairs at the project had been restarted.

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Financial analysts had feared the project would take longer to recover after being shut down because its ramp up has been staged at a slower-than-typical pace due to the nature of the oil-bearing formation.

Sunrise, which is 50 per cent owned by BP PLC, uses steam injected through horizontal wells to melt the heavy, sticky bitumen and allow it to be pumped to surface.

On Thursday, Husky reported a pipeline leak in Saskatchewan had spilled 200,000 litres to 250,000 litres of diluted heavy oil, with some of the mixture winding up in the North Saskatchewan River.

During the call, Peabody said he doesn't expect any production interruption from shutting down the leaking pipeline because oil can be routed on alternative paths through its gathering system to its hub at Lloydminster, Alta., on the Alberta-Saskatchewan border.

Husky reported a second-quarter loss of $196 million or 20 cents per share on Friday, compared with a loss of $458 million or 47 cents per share in the same period last year.

Production fell to 316,000 barrels of oil equivalent per day from 337,000 boe/d in the second quarter of 2015, thanks to the Sunrise outage and lower production from its Liwan gas project in southeast Asia.

Husky says asset sales that are nearing completion will allow it to reduce its debt to $4.5 billion from $7 billion earlier this year and put it in a stronger financial position.

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