ConocoPhillips COP reached yet another milestone with the commissioning of first steam at phase 2 of its Surmont oil sands project in Canada on May 29.
The technique employed by Surmont to recover bitumen is known as steam-assisted gravity drainage (“SAGD”). This method necessitates the reservoir to be heated with steam to facilitate the flow of oil. First steam is an important step for the onset of production, or first oil, which is anticipated during the third quarter of 2015.
Production is expected to accelerate through 2017, which is likely to boost gross capacity by about 118,000 barrels of oil per day (BOD). Total gross capacity for Surmont 1 and 2 is estimated to touch 150,000 BOD.
Located in the Athabasca Region of northeastern Alberta, Canada, around 35 miles (63 kilometers) southeast of Fort McMurray, the Surmont project is operated by ConocoPhillips under a 50:50 joint venture agreement with Total E&P Canada.
ConocoPhillips is a major global exploration and production (E&P) company with operations and activities in 30 countries that include the U.S., Canada, the U.K./Norway, China, Australia, offshore Timor-Leste, Indonesia, Libya, Nigeria, Algeria, Russia and Qatar.
ConocoPhillips’ initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and Permian plays. For the first quarter, daily production averaged 1.610 million barrels of oil equivalent (MMBOE). The company is on track to deliver average annual production as well as margin growth of 3–5%, with its focus on liquid-rich ventures primarily in the U.S. and Canada, although partially offset by curtailed production from Libya. Organic reserve additions of about 0.7 billion barrels of oil equivalent came mainly from Eagle Ford and Bakken in the Lower 48, oil sands and western Canada as well as APLNG. Going forward, these regions are likely to play an important part in increasing the company’s yield.
ConocoPhillips currently carries a Zacks Rank #3 (Hold). Better-ranked players from the same space include Transmontaigne Partners L.P. TLP, LRR Energy, L.P. LRE and Pembina Pipeline Corporation PBA. All these stocks sport a Zacks Rank #1 (Strong Buy).
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