By Ryan Dezember
HOUSTON -(MarketWatch)- Devon Energy Corp. DVN +0.55% Chief Executive John Richels said Wednesday that the oil and gas producer has begun injecting steam into heavy oil wells at the second phase of its Jackfish oil field in Alberta, Canada and expects full production there to begin in 16 to 18 months.
The project’s first phase is producing 35,000 barrels of oil a day, and additional phases are expected to have similar output, he said.
By 2020 the Oklahoma City company should see daily production from its Canadian oil sands projects of between 150,000 to 175,000 barrels a day, Richels said during a webcast presentation to investors.
“And that production doesn’t decline over time,” he said. “It stays flat for about 20 to 25 years, so it’s a terrific feature to have in a portfolio.”
Devon is using an oil extraction method called steam assisted gravity drainage in its Alberta oil fields.
A Devon spokesman said only about 20% of the oil within the area’s Athabasca oil sands can be reached using traditional mining techniques, so the company is boiling saltwater extracted from deep aquifers nearby to create steam, which is then forced into deep horizontal wells to soften the heavy oil, allowing it to flow to the surface.
Richels said Devon has asked Canadian regulators for permission to begin a third phase there and is “hopeful” the project is approved at the end of the year or early next year.
The company also plans “four or five” similar phases on its adjacent Pike oil fields, Richels said.
Devon’s “oil sands position gives us very visible low risk production growth for over the next few years,” Richels said.
Shares of Devon recently traded 2% higher at $83.17.