Oil and Gas

Conoco's Surmont Alberta oil sands expansion begins operations

CALGARY, Alberta, June 1 (Reuters) - ConocoPhillips said on Monday it has started commercial operations at the 118,000 barrel per day phase 2 expansion of its Surmont project in the Canadian oil sands of northern Alberta.

The company said that last week it began to inject steam into the oil sands reservoir at the thermal project, 63 kilometers (35 miles) southeast of the town of Fort McMurray.

The steam will slowly liquefy tarry bitumen deposits so they can flow to the surface. The first oil from the expansion, which will push the project’s total capacity to 150,000 bpd, is expected in the third quarter of the year and will ramp up through next year.

Surmont’s phase 2 is one of several new projects in the oil sands to begin production despite weak oil prices, including Imperial Oil Ltd’s recent 40,000 bpd expansion of its Cold Lake oil sands project, which began initial production earlier this year.

Output from Canada’s oil sands region, the world’s third-largest crude reserve, is expected to rise by about 150,000 bpd this year to an average 2.3 million barrels per day, according to industry forecasts.

ConocoPhillips co-owns the project with French oil major Total SA. (Reporting by Scott Haggett; Editing by Peter Galloway)