Connacher production rises despite gas leak

CALGARY — A natural gas supply line leak last month resulted in a four-day shutdown at Connacher Oil and Gas Ltd.’s Algar thermal oilsands facility, the company said in a brief first-quarter update on Monday.

The Calgary company reported average production from its Great Divide project — the expansion Algar and the original Pod One phase — of 13,400 barrels per day, up eight per cent from 12,400 bpd in first quarter 2013 and 18 per cent from 11,400 bpd in the fourth quarter.

Last month, it said actual production had been 13,700 bpd for January and February. Nameplate capacity of the phases started in 2007 and 2010 is 20,000 bpd.

Connacher said in a news release the gas pipeline leak was discovered on March 7 and the plant was taken off-line from March 9 to March 12, 2014. It didn’t say what impact that had on quarterly average production.

The oilsands company which has been trying to truck more bitumen to rail-loading facilities instead of pipeline access points reported it sold 59 per cent of its output to customers outside of Alberta in the first three months of the year, down from 65 per cent in the previous quarter.

Rail allows producers to avoid a Midwest U.S. pipeline bottleneck and access markets with better prices.

Connacher has also been drilling infill horizontal wells to try to boost stubbornly lagging production and noted six of nine wells in the latest program had been drilled as of mid-April. The remaining three infill wells are to be drilled during the second quarter — the wells are expected to add to production in the fourth quarter.

In Toronto, the stock fell as much as five cents and gained as much as two cents but closed at 33.5 cents, down half a cent. It has ranged between six and 35 cents in the past year.

Analyst Mark Friesen of RBC Dominion Securities said in a note Connacher fell slightly short of expectations on production, likely due to the Algar shutdown.

“We are encouraged with continued operational improvements at Pod One but highlight that Algar has lagged,” he wrote.

Connacher uses steam-assisted gravity drainage technology, where steam is injected through a horizontal well to allow bitumen to flow into a lower parallel well to be produced.

dhealing@calgaryherald.com