Cenovus’s Grand Rapids oil sands project approved

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Cenovus Energy Inc., a major oil sands player, has received regulatory approval for another project and expects to make a final decision later this year on when to proceed.

The Alberta Energy Regulator approved the proposed Grand Rapids thermal oil sands project Thursday, the company said in a statement. Alberta's provincial cabinet also issued its blessing via an order in council.

The Grand Rapids project marks Cenovus's fourth oil sands project, and is expected to churn out 180,000 barrels of bitumen per day. It will be developed in multiple phases, Cenovus said. Energy companies adopted staged approaches to developing projects after being hit by explosive cost inflation late last decade. The Grand Rapids project will use wells rather than trucks and shovels to extract the bitumen, a tarry substance that is processed into oil and other petroleum products.

Calgary-based Cenovus did not detail how many phases the project, about 300 kilometres north of Edmonton, will entail. "Cenovus expects to make a decision on the timing of development later this year," the company said in a press release. "Once a decision is made to proceed with Grand Rapids, Cenovus will be able to rely on existing infrastructure, including roads, power and camps at its Pelican Lake conventional heavy oil operation."

The company expects this infrastructure to "contribute to the competitive capital efficiencies" of the project. Cenovus said it has been operating a steam-assisted gravity drainage pilot project at the site for more than three years, and will continue to run the pilot. The company believes the bitumen reservoir is "very consistent," which is key for oil sands companies. Bitumen deposits in which the amounts of water, sand, clay, and bitumen vary make extraction more challenging.

Cenovus owns all of the Grand Rapids project.