Husky enjoys upstream progress in Indonesia, China

09 November 2016, Week 44 Issue 550

Canadian independent Husky Energy disclosed steady progress at its Indonesian and Chinese gas exploration and production assets in its third-quarter earnings report.

Husky’s main operations are in Canadian heavy oil production and oil refining, but the group has a string of producing interests in the Asian market, including stakes in the Liwan gas project in the South Chain Sea and in Indonesia’s Madurai Strait gas project.

Husky reported improved net earnings of US$1.4 billion for the quarter. The company’s CEO, Asim Ghosh, said that, despite persistent volatility in oil prices, Husky had “built a strong balance sheet”, and had achieved its target of more than 40% of production being “generated by low sustaining capital projects by the end of 2016. And we have many more such projects in the wings.”

Indonesia

In Indonesia, Husky said work to start production at the liquids-rich BD field at Madurai Strait was 90% complete, and that first production was anticipated to start in 2017, at a rate of 40 mcm per day of gas and 2,400 bpd of associated liquids.

Four development wells have been drilled to target depth and Husky has almost completed construction of an FPSO vessel to process gas and liquids. Preparations are under way at the field for transportation and installation of the new vessel at the field.

Husky reported that at the shallow-water MDA-MBH gas fields, engineering, procurement and construction (EPC) work was “20% complete, and tendering is nearing completion for [a floating production unit] FPU”.

At the MDK field, Husky said the engineering, procurement, construction and installation (EPCI) tendering process was completed in third quarter.

Husky estimated that combined net sales volumes from the BD, MDA-MBH and MDK fields were anticipated to be “approximately 100 mmcf (2.83 mcm) per day of gas (net to Husky) and 2,400 [bpd] of associated liquids once production is fully ramped up”.

Fields at Madura Strait will be developed “in tandem” and are to come on stream in 2018-19, concluded Husky. As well as its expectations for production at Madura Strait, Husky is also exploring for gas at the nearby Anugerah Block in Indonesia.

China

In China, Husky reported that gross sales volumes from the Liwan project had averaged 220 mmcf (6.23 mcm) per day during July-September, with 10,600 bpd of associated liquids production. Husky said gross take-or-pay gas volumes remained within a range of 300-330 mmcf (8.5-9.35 mcm) per day.

Husky added that it had finished the installation of a second 22-inch (559-mm) subsea pipeline at Liwan that would “provide additional operating flexibility and redundancy over the life of the project”. Husky also disclosed that a new pricing formula in relation to the Liwan project had been agreed in the third quarter. Ghosh observed that this new formula was “a successful outcome, providing for an attractive price over the life of the fields”.

As well as gas interests, Husky also has a 40% working stake in China’s Wenchang oilfield, which is operated by CNOOC Ltd and has production of around 7,100 bpd of light oil, according to Husky. Wenchang has around 30 wells with floating production, storage and offloading (FPSO) infrastructure and is located around 400 km from Hong Kong in the Pearl River Mouth region of the South China Sea.

Husky also is exploring for gas at Block 15-33 near the Liwan project and at the offshore Taiwan Block DW1.

Edited by

Andrew Kemp

Editor

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