Canadian Natural Resources considering major expansion of Horizon oil sands mine

3rd May 2024

By: Reuters


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Canada's largest oil and gas producer Canadian Natural Resources is looking at opportunities to significantly increase bitumen output at its main oil sands mine, the company said on Thursday.

President Scott Stauth said the company is considering a 195 000 barrel-a-day (b/d) expansion at its Horizon mining and upgrading plant in northern Alberta through new extraction and treatment processes. Previously the company said it could add 75 000 b/d of bitumen, but Stauth said Canadian Natural had been able to enhance engineering and scale up the processes.

Horizon currently has capacity to produce about 255 000 b/d of synthetic crude oil made from bitumen.

Stauth said the expansion would depend upon new pipeline export capacity as well as government financial support for a carbon capture and storage project proposed by the Pathways Alliance group, which Canadian Natural is part of.

"That fiscal policy is absolutely key for us to be able to move any additional expansion volumes forward," Stauth said on an earnings call. "Also important in terms of that would be securing and working on enhancing egress capacity."

In its earnings release, Canadian Natural said it will benefit from the start-up of the Trans Mountain oil pipeline expansion, in which it can move 94 000 bb/d.

The company also increased its shipping commitment on the Flanagan South pipeline to the US Gulf Coast in the first quarter, to 77 500 b/d from 22 500 b/d.

Canadian Natural missed analysts' estimates for first-quarter profit, hurt by lower-than-expected production and a drop in natural gas and synthetic crude oil prices.

The firm posted an adjusted profit of C$1.37 a share, below analysts' average estimates of C$1.48 a share, according to LSEG data. Net earnings were C$987-million compared with C$1.8-billion for the first quarter of 2023.

The Calgary-based company produced 1.33-million barrels of oil equivalent per day (boepd) in the first quarter, slightly higher than the same period last year but lower than analysts' expectations of 1.35 million boepd.

Oil sands mining production fell 3% from year-ago levels to 445209 bb/ld, due to planned and unplanned maintenance.

The company's realized natural gas price fell 40% to C$2.55 per thousand cubic feet on average for the quarter from a year earlier, amid a slump in North American gas markets due to record production and low heating demand during a mild winter.

In oil sands mining, synthetic crude oil prices decreased nearly 8% to an average C$88.84/bl.

Canadian Natural said it will shift some drilling activity away from dry gas wells and towards heavy oil, and plans to ramp up activity in the second half of the year when it anticipates stronger pricing.

Canadian Natural shares were last down 0.3% at C$102.80 on the Toronto Stock Exchange.

Edited by Reuters


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