Production volumes are exceeding plant capacity as Canadian Natural Resources expands its integrated Horizon oilsands project, enabling the company to fast-track its expectations for a milestone in cost performance.
The target is to drop per barrel synthetic crude oil (SCO) production costs under $20/bbl, and if it is a race between mined SCO producers, Canadian Natural is already in the lead.
The company predicted it would break through this threshold by 2020 during its 2016 investor day, but it now expects it to happen much sooner.
“We’re looking to exit 2017 under $20/bbl,” chief operating officer Tim McKay said during Canadian Natural’s 2016 results call on Thursday.
“We’re making great progress,” added president Steve Laut.
“The effectiveness and efficiency that we’re gaining at Horizon, combined with the increased reliability and utilization, have had a big impact on operating costs.”
Last fall Canadian Natural increased Horizon synthetic crude capacity by 45,000 bbls/d to 172,000 bbls/d, and will add on another 80,000 bbls/d before year-end 2017, bringing total nameplate for the project to 252,000 bbls/d.
Actual production in 2016 averaged 123,265 bbls/d, rising to 184,000 bbls/d in December and 202,600 bbls/d in February 2017 as the project realized volumes well exceeding expanded plant capacity.
SCO operating costs were $22.53/bbl in the fourth quarter of 2016 and $25.20/bbl for the year, down from $28.61 in 2015.
This is slightly lower than Suncor’s SCO operating costs, which were $24.95/bbl in the fourth quarter of 2016 and $26.50/bbl for the year, down from $27.85 per barrel in 2015 and $33.80 per barrel in 2014.
At the Shell-operated Athabasca Oil Sands project, SCO costs were $26.52/bbl in the fourth quarter of 2016 (full year data not currently available), compared to $36.48 in 2015 and $44.53 in 2014, partner Marathon Oil reports.
While Syncrude has realized significant reductions in its operating costs, $20/bbl is further out of range. The project, majority owned by Suncor, realized $32.55/bbl in the fourth quarter of 2016 and $35.95/bbl for the year, down from $42/bbl in 2015 and $49/bbl in 2014.