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Update-Husky OS head resigns & project uncertain Sunrise-BP Toldeo

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    Charles Randall

    < Here is update on the $CA 10 Billion Sunrise-BP Toledo JV is halted it will bring total of halted/shelved Canada Oil Sands projects to $CA 90 billion. – CER>
    Husky oil-sands head resigns with project uncertain

    Thu Jan 22, 2009 CALGARY, Alberta (Reuters)The head of Husky Energy Inc’s oil sands business has resigned, the Canadian company said on Thursday, as questions linger about the fate of its multibillion-dollar project with the oil industry in a downturn.
    Catherine Hughes, vice-president of oil sands at Husky since 2007, has left the company after it consolidated its oil sands and heavy-oil business units under its chief operating officer, spokeswoman Sharon Murphy said.

    The resignation comes as Husky faces a major decision on whether to go ahead with its C$10 billion ($8 billion) Sunrise oil sands project in northern Alberta, a joint venture with BP Plc , after numerous rivals have put such developments on hold.

    “With the organization, Ms Hughes decided to leave the company of her own accord and pursue other options,” Murphy said. A call to Hughes’s office at the Calgary-based company early on Thursday was not returned. She joined Husky in 2005 after running oil service giant Schlumberger Ltd’s Canadian operation.

    Husky, controlled by Hong Kong billionaire Li Ka-shing, chopped its 2009 spending on Sunrise by 78 percent to just C$65 million in its latest budget. Investors expect to learn of its fate when Husky releases fourth-quarter results on February 4. “There’s nothing specific I can say, other than we’re continuing to optimize our development scenarios for Sunrise,” Murphy said.

    This week, Suncor Energy Inc halted its C$20.6 billion Voyageur oil sands expansion — which it had already started building — blaming oil prices that have fallen by more than $100 a barrel since July and the global credit crisis. That pushed the value of Canadian oil sands projects that have been delayed since October to at least C$90 billion.

    The 9 billion-barrel Sunrise project is part of an integrated production and refining plan detailed when the companies announced the joint venture in 2007. Plans for Sunrise call for a steam-assisted gravity drainage project, where steam is pumped into the earth to loosen up the tar-bitumen in the oil sands so it can be pumped to the surface in wells.

    Husky and BP also co-own a refinery in Toledo, Ohio, which is targeted for $2.5 billion of retooling work so it can run the oil sands-derived crude. Husky had been expected to decide on going ahead with Sunrise in 2008. The first 60,000 barrel a day phase was expected to start up in 2012.

    FirstEnergy Capital Corp analyst William Lacey said he had not heard if Husky was shelving the project. “In the third quarter, they said there was a whole bunch of re-scoping, and what have you, ongoing. But frankly, the fact that there is absolutely zero discussion about this one, I find it curious,” Lacey said.

    Oil sands projects take years to develop with thousands of skilled workers, and before the end of 2008 the industry faced a severe shortage of labor, which sent costs soaring. Now, oil prices have fallen to around $40 a barrel, at least $20 under what many analysts think is needed for major projects to be sanctioned. Petro-Canada , StatoilHydro , Canadian Natural Resources Ltd and Nexen Inc are among companies that have also shelved projects.
    Shares in Husky fell C$1.17, or nearly 4 percent, to C$29.58 on the Toronto Stock Exchange on Thursday. They are down 27 percent in the past 12 months.
    ($1=$1.25 Canadian)

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