Husky Energy reported average margins of $21.56 per barrel of asphalt in the second quarter of 2017.
The steady margins are helping Husky to keep advancing engineering work on a potential 30,000 barrels per day project, to double asphalt capacity in Lloydminster.
“We continue to like the asphalt business,” said Husky CEO Rob Peabody in a conference call on July 21, to discuss second-quarter results.
“One of the things we like about it actually, is it’s had a very long period of very stable margins.”
Husky currently produces about five per cent of North America’s asphalt.
“It’s a business that we know very well and we like the financial characteristics of it, so we are moving, and we have been working on the engineering of that project,” Peabody said during question period.
“We haven’t taken a sanction decision at this point.
“So we’ll be engineering that plant, I think we’ve said before, probably towards the end of this year probably or early next year, we’ll have another look at it. “
He said strategically, producing asphalt provides a home for a portion Husky heavy oil production.
Husky is currently producing about 80,000 bbls/per of heavy oil from nine thermal plants in the Lloydminster region, with plans to increase that by 50 per cent in the next five years.
“Our heavy oil production is one of the few crudes in the world that makes a very high quality asphalt without additives, so we feel we have a real competitive advantage” said Peabody.
Husky also reported its growing Midstream Limited Partnership is supporting thermal oil growth in the Lloydminster region.
The company noted construction is ongoing on the LLB direct pipeline, which will come into service in 2018.
“We are also building the northern leg of the South Saskatchewan Gathering Line, which is set for completion in 2020,” said Husky’s COO Rob Symonds.
Husky reported a net loss of $93 million in the quarter, compared with a loss of $196 million a year earlier.
The company was helped by a realized $41.48 per barrel equivalent of oil in the second quarter, up from $34.59 in the same period of 2016.
Average upstream production was 320,000 boe, higher than the 316,000 boe/day in the second quarter of 2016.