Junior Oil Sands A Rare Bright Light of Oilsands Growth with new 6,000 Bbl/d Expansion

Three major pieces of multi-million dollar equipment for a production expansion that have spent years sitting at site at the Orion SAGD project waiting for sanction are finally being put to work.

For the second time in less than six months, privately-held junior Osum Oil Sands Corp. has announced it will proceed with work at Orion to increase production capacity. It now plans to double its volumes by the end of 2019.

Orion, which Osum purchased from Royal Dutch Shell plc in 2014 for $325 million, currently produces about 9,000 bbls/d and is the company’s sole operating asset. Last fall, one month after completing its 1,500-bbl/d Phase 2A expansion, Osum began construction of Phase 2B, which will add 3,000 bbls/d of capacity with first steam expected in mid-2018. The company today sanctioned Phase 2C, which will add a further 6,000 bbls/d of capacity by the end of 2018.

“We are on a clear path to double production by the end of 2019, moving us closer to our goal of producing 20,000 bbls/d at Orion,” Osum CEO Steve Spence said in a statement.

This morning, he told the DOB that the company is benefiting from a “continuum of execution” with workers and equipment already in the field.

“We announced our Phase 2B expansion back in October, which started the ball rolling for us. We’ve got a rig in the field, construction work ongoing; we knew we wanted to proceed with Phase 2C in a timely manner following up on that. As we looked at the opportunities to jointly execute the projects it just made an awful lot of sense to do them together. We will be working with essentially the same contractors and just continuing the program along rather than taking a break in between, so the synergies of doing that were pretty strong,” Spence said.

“We’re not going to say that this is all about oil price growth, but we’re also seeing a bit more stability in the market that has given some confidence, and the opportunity to get to that more significant production level more quickly is pretty appealing to the company.”

The announcement stands out as one of the few examples of investment in new oilsands growth, with capital expenditures expected to drop to $10 billion this year for the first time in nearly a decade (DOB, Jan. 8, 2018).

Spence said that increasing production at Orion has always been a core part of the company’s strategy.

“We have some fantastic assets; we’ve always liked the Cold Lake area because of the people, because of the quality of the oil and because of the performance of the asset there. We’re glad to be able to grow ourselves a platform that we can grow an awful lot in the future from.”

A key part of the asset purchase from Shell was major equipment for an expansion that already had regulatory approval. This includes a third evaporator tower for Phase 2B as well as a fourth boiler and fourth evaporator tower for the new Phase 2C, as well as other small pieces of equipment.

“We have some very happy folks at site as we begin to use the equipment that they’ve been staring at for a very long time and actually put that up. It’s a very gratifying feeling,” Spence said.

“It was one of the things when we purchased the asset that we knew would be a real long-term advantage; we didn’t know when we would be able to take advantage of it but certainly we are starting to put that equipment to good use.”

Supporting Osum on the expansion are Scovan Engineering Inc., Hive Innovations Inc., League Projects Ltd., Federation Construction Services Inc. and Akita Drilling Ltd.


Recent News

  1. Waterous Energy Fund announces the final step of its acquisition of Osum Oil Sands Corp; shareholder meeting to be held April 30, 2021 to approve the transaction

  2. Waterous Energy Fund Announces Successful Take-Over Bid for Osum Oil Sands Corp., Commencement of Mandatory 10-Day Tender Extension Period, and Voluntary Resignation of Osum Directors and Officers

  3. Osum Board Withdraws its Recommendation that Shareholders Reject the Offer from Waterous Energy Fund

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