For the second time in less than six months, privately held junior Osum Oil Sands Corp. announced this morning it will proceed with work at the Orion SAGD project to increase production capacity, now planning to double its volumes by the end of 2019.
Orion, which Osum purchased from Shell in 2014 for $325 million, currently produces about 9,000 bbls/d and is the company’s sole operating asset. It is located near Cold Lake, Alta.
Last fall, one month after completing its 1,500-bbl/d Phase 2A expansion, Osum commenced construction of Phase 2B, which will add 3,000 bbls/d of capacity with first steam expected in mid-2018. Today the company sanctioned Phase 2C, which will add a further 6,000 bbls/d of capacity by the end of 2018.
“We are on a clear path to double production by the end of 2019, moving us closer to our goal of producing 20,000 bbls/d at Orion,” Osum CEO Steve Spence said in a statement.
On Monday he told JWN that the company is benefiting from a “continuum of execution” with workers and equipment already in the field.
“We announced our Phase 2B expansion back in October, which started the ball rolling for us. We’ve got a rig in the field, construction work ongoing; we knew we wanted to proceed with Phase 2C in a timely manner following up on that. As we looked at the opportunities to jointly execute the projects it just made an awful lot of sense to do them together. We will be working with essentially the same contractors and just continuing the program along rather than taking a break in between, so the synergies of doing that were pretty strong,” Spence said.
“We’re not going to say that this is all about oil price growth, but we’re also seeing a bit more stability in the market that has given some confidence, and the opportunity to get to that more significant production level more quickly is pretty appealing to the company.”
While the capital cost of the latest expansion was not disclosed, Osum said it would be funded by cash on hand and cash flow.