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Cenovus' Telephone Lake Oil Sands Project Approved

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   |    Wednesday,November 19,2014

Cenovus Energy Inc. has received approval from the Alberta Energy Regulator (AER) and the province of Alberta for its 100%-owned Telephone Lake thermal oil sands project.

The proposed project is located approximately 90 kilometres northeast of Fort McMurray, within the company’s Borealis Region of northern Alberta.

The approval is for a steam-assisted gravity drainage (SAGD) project with initial production capacity of 90,000 barrels per day (bbls/d), which is anticipated to be developed in two 45,000 bbls/d phases. Telephone Lake is expected to eventually have total production capacity in excess of 300,000 bbls/d, with a project life of more than 40 years. Cenovus filed its Telephone Lake regulatory application and Environmental Impact Assessment in the fourth quarter of 2011.

Brian Ferguson, Cenovus President & Chief Executive Officer said: "We’re pleased to have received regulatory approval for Telephone Lake as it has the potential to be another cornerstone asset within our portfolio.

We’re excited about the opportunity that this high quality asset provides for us to create future value."

The company has drilled more than 300 stratigraphic test wells at the property over the past 10 years. The results of this drilling program have confirmed that the Telephone Lake reservoir has high permeability and a thickness similar to that of Cenovus’s existing Christina Lake thermal oil sands project. Cenovus also conducted a dewatering pilot project that was successfully concluded during the fourth quarter of 2013, demonstrating the company’s ability to remove an underground layer of non-potable water sitting on top of the oil sands deposit at Telephone Lake.

While dewatering is not essential to the development of Telephone Lake, the company believes it will enhance project economics and reduce the impact on the environment. Approximately 70% of the top water was removed during the dewatering pilot and replaced with compressed air, which Cenovus expects will improve the steam to oil ratio (SOR) of the project.

As of December 31, 2013, the independent qualified reserves evaluator (IQRE) estimated Cenovus’s best estimate bitumen economic contingent resources for Telephone Lake at 2.6 billion barrels. Cenovus expects to reclassify a significant portion of these contingent resources to proved plus probable reserves once a development plan is approved by the company. The company expects to make a decision on the timing of development in 2015.

Cenovus has two operating oil sands projects - Foster Creek, with approximately 150,000 bbls/d of current gross production capacity, and Christina Lake with 138,000 bbls/d of current gross production capacity. Expansions are continuing at both of these projects. Construction of phase A at the company’s Narrows Lake project is progressing. Cenovus has 50% ownership of these three projects with its partner ConocoPhillips. In addition, Cenovus is moving ahead with phase A of its 100%-owned Grand Rapids oil sands project.