Brian Zinchuk is editor and owner of Pipeline Online
This is the Cenovus SAGD facility near Vawn. There’s lots of room between these plants to position additional ones in between. Photo by Brian Zinchuk
CALGARY, LLOYDMINSTER – Cenovus is planning on taking two steps forward after one big step backward this year in northwest Saskatchewan, announcing plants to “improve and expand four existing thermal facilities in the region.”
This comes after a blowout in May at its Rush Lake 2 facility put both Rush Lake 1 and 2 out of commission for the foreseeable future. An investigation into the blowout, which took months to contain, is ongoing.
Prior to the blowout, on any given day Cenovus’ Lloydminster thermal facilities accounted for at least a quarter of Saskatchewan’s overall daily oil production.
On Sept. 26, Cenovus issued the following statement by email:
“Cenovus has received project approvals from the Saskatchewan Ministry of Energy and Resources (MER), allowing us to improve and expand four existing thermal facilities: Spruce Lake, Bolney, Sandall, and Edam while continuing to operate these assets in a safe and responsible manner. These approvals will incorporate technologies, designs and processes to enhance safety and operational integrity. In parallel, we continue to proactively manage risk through operations and our Integrity Management Plan. These applications were submitted to the Ministry before the Rush Lake incident. Our Saskatchewan thermal operations are an important part of Cenovus’s long-term strategy and an economic generator for the provincial economy.
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“Additionally, the investigation into the release of steam to surface at the Rush Lake 2 site earlier this year is progressing. The failed well is safely under control and work is progressing on final well isolation and site remediation. We continue to work with the MER, and as outlined in the Ministerial order regarding the Rush Lake 2 thermal facility investigation, independent third parties will verify our investigation findings. An investigation report will be submitted to the government once completed.”
Cenovus’ Vawn SAGD facility. Photo by Brian Zinchuk
Cenovus has 12 “Lloydminster Thermal” facilities throughout northwest Saskatchewan. Prior to its acquisition by Cenovus, Husky had spoken of eventually building up to 15 such SAGD facilities. The last few of those 12 were completed by Cenovus, after the Husky takeover in 2021. Some locations, like Rush Lake and Spruce Lake, have multiple facilities in close proximity to each other. Rush Lake 1 and 2 were shut down when the May blowout occurred on a well pad just east of the Rush Lake 2 facility.
The loss of Rush Lake 1 and 2 constitutes a major hit, not only for Cenovus, but for Saskatchewan oil production. Rush Lake 1 and 2 facilities were producing approximately 18,000 barrels per day combined. At a time when the provincial government is seeking to reach 600,000 barrels per day by 2030, and Premier Moe has spoken of eventually getting to a million barrels per day, the loss of 18,000 barrels per day was a heavy blow. It also roughly equates half of the stated goal of the 2025 budget’s latest incentive program, the Low Productivity and Reactivation Oil Well Program, which has a goal of increasing provincial production by 30,000 barrels per day by 2029.
This undated photo shows the Rush Lake 2 site of the blowout. The North Saskatchewan River can be seen in the background, 2 kilometres away. Facebook
Put in perspective, the entire “Bakken Boom” peaked at about 70,000 barrels per day, so Rush Lake 1 and 2 combined equaled nearly half of the “Bakken Boom.”
As for Cenovus, the capital cost of the Lloydminster Thermals was initially around $250 million per facility, all in, and closer to $350 million per facility, all in for the later ones. Rush Lake 2 was one of those later ones, meaning the total investment in those two facilties was likely close to $600 million, all-in. Pipeline Online had asked by email if it would be possible to redeploy the Rush Lake hardware elsewhere. Cenovus said, “We have no other details beyond the statement.”
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