Cenovus investment may benefit Drumheller area
Drumheller may benefit from more oil and gas activity in light of a recent announcement by Cenovus.
Last week Cenovus released its 2017 capital plan focusing on disciplined growth, to increase its capital spending 24 per cent compared to last year. One of its major highlights is that the company is ready to resume construction of the Phase G expansions of its Christina Lake oil sands project.
“Our decision to proceed with this drilling program, and to restart construction on phase G of our Christina Lake oil sands project, was largely driven by the progress we’ve made over the last couple of years in reducing our overall cost structures and our confidence that the majority of those cost reductions will be sustainable over the longer term,” said Brett Harris media lead for Cenovus.
Part of its plan that may benefit Drumheller comes from its conventional portfolios that targets growth in the Palliser Block. This area, that surrounds Brooks at the southern end and extends towards Drumheller at it northernmost point, is slated for $160 million of growth capital directed towards the area.
“To date, we’ve identified about 700 attractive drilling opportunities on the Palliser Block. In 2017, we plan to allocate about $160 million to drill approximately 50 horizontal development wells and 60 stratigraphic (delineation) wells,” he said. The Palliser Block has tight oil and natural gas. “We intend to pursue some exciting opportunities on the Palliser Block to generate short-cycle cash flow to support continued growth in our oil sands assets, which is consistent with our long-standing conventional strategy,” said Brian Ferguson, Cenovus President & Chief Executive Officer in a press release. “Our investment plans for Palliser and Christina Lake phase G far exceed our internal rate of return threshold.”
This budget also calls for $150 million for maintenance and optimization across its conventional portfolio. This includes projects in Palliser, Weyburn, Pelican Lake and Suffield.
“We would expect our planned 2017 drilling program at Palliser to result in some incremental activity in the Drumheller Region. The finer details are still being worked out,” said Harris.