A few snips from NXY website
Read this a few times
Snip - "Low operating costs and no royalties make Buzzard a very valuable asset," said Fischer. "At peak production, we expect it to generate approximately $1.6 billion of annual pre-tax cash flow for us, assuming oil prices of US$50/bbl."
nexeninc.com
"Snip"
Buzzard on Track for First Oil
Our Buzzard project remains on schedule and on budget. Final hook-ups and commissioning are nearing completion. We expect production to ramp up as we tie-in the initial eight development wells, reaching peak rates of approximately 85,000 boe/d, net to us, in the first half of 2007. We have a 43.2% operated working interest in Buzzard.
The facility is designed to process up to 200,000 bbls/d of oil and 60 mmcf/d of gas, including the removal of hydrogen sulphide. Based upon recent drilling results, we have experienced more well-to-well variability in the concentration of hydrogen sulphide than previously seen. We are confident that existing equipment and processes will allow us to manage this variability for at least the first two to three years of production. Over the next 6 to 12 months we will acquire additional reservoir information to determine whether additional equipment is required. If required, our preliminary analysis indicates maximum additional capital of approximately $250 million ($110 million net to Nexen).
"Low operating costs and no royalties make Buzzard a very valuable asset," said Fischer. "At peak production, we expect it to generate approximately $1.6 billion of annual pre-tax cash flow for us, assuming oil prices of US$50/bbl."
Long Lake Project Update
Our Long Lake project continues to progress well. All SAGD wells have been drilled and completed. SAGD module fabrication is complete, all modules are on site and construction is approximately 90% complete. We expect our SAGD operations to be mechanically complete near year-end, with steam injection commencing in the first quarter of 2007. Bitumen production is expected to ramp up to peak rates over a 12 to 24 month period. Upgrader module fabrication is largely complete and over 90% of the modules are on site. Construction of the upgrader is approximately 60% complete and start up remains scheduled for the second half of 2007. Peak output of premium synthetic crude oil is expected within 6 to 18 months of start up.
While construction progress has been significant, high activity in the oil sands is placing ongoing pressure on the costs of labour and services. In addition, labour productivity has been lower than anticipated, requiring a larger workforce to maintain progress. After a review of all trends, the projected cost of Long Lake has increased from $3.8 billion to $4.6 billion ($1.9 billion to $2.3 billion net to Nexen).
"Although we are seeing pressure on capital costs at Long Lake, we expect to benefit from a significant operating cost advantage ensuring attractive returns," said Fischer.
Production capacity for the first phase of Long Lake is approximately 60,000 bbls/d (30,000 bbls/d net to Nexen) of premium synthetic crude. Our plan is to expand oil sands production to approximately 240,000 bbls/d (120,000 bbls/d net to Nexen) over the next 10 years. Three additional phases of 60,000 bbls/d (30,000 bbls/d net to Nexen) are planned using the same technology and design as Long Lake. We are currently progressing Phase 2 development. We have completed the seismic and core hole drilling programs, ordered several major vessels and are finalizing regulatory applications. We continue to develop our overall execution strategy, cost estimate and project schedule. |
