Husky Energy looks to increase oil output at Rush Lake, Sask. project

Husky Energyhas sanctioned Rush Lake 2, a new 10,000 barrels per day (bbls/day)heavy oil thermal development in Saskatchewan, as itcontinues to advance its resilient portfolio of low sustainingcapital projects.

The company's heavy oil thermal production isexpected to reach about 80,000 bbls/day by the end of 2016, fromabout 18,000 bbls/day in 2010.

Rush Lake is about 33 kilometres east of Swift Current.

"Rush Lake 2 is yet another project in a high-return portfoliothat is profitable even at today's low oil prices," said CEO AsimGhosh. "These developments are key in our transition to a lowsustaining cost business. Supported by the Lloydminster thermalvalue chain, we capture incremental value from production andrealize the upgrading and refining margins, further strengtheningour resilience."

The Rush Lake 2 thermal project builds on a proven template ofheavy oil thermal developments in the Lloydminster region and isanticipated to start up in late 2018. Construction is currentlyunder way at three thermal projects scheduled to begin productionnext year and resources are expected to be directed to Rush Lake 2as that work is completed.

These bite-sized projects use a highly standardized and modularapproach to development. Husky achieves cost savings andefficiencies in engineering, module fabrication, construction andongoing operations.

Husky has an unmatched land and infrastructure position in theLloydminster region and the thermal value chain is designed toextract incremental value from its heavy oil thermal production. Thevalue chain includes theSaskatchewan gathering system, LloydminsterUpgrader and asphalt refinery,oil storage capacity at Hardistyand theCompany's strategically located refinery in Lima, Ohio.

At the Lima Refinery, the Company is proceeding with the initialstages of a crude oil flexibility project designed to improvereliability at the facility and allow for the processing of up to40,000 bbls/day of heavy crude feedstock from Western Canada.

Theproject allows Husky to further balance its upstream production anddownstream capabilities. This capital efficient investment, comparedto a new build facility, will allow the refinery to swing betweenlight and heavy crude to achieve the best margins. The project isexpected to be completed in stages over the next three years.

"The margin-based Downstream business further improves Husky'sresiliency in a low oil price environment by mitigating exposure tooil price differentials," said Ghosh.