Husky ready to assemble pieces of massive Liwan platform in China

CALGARY – Husky Energy Inc. said Tuesday it’s getting ready to assemble its massive Liwan offshore platform in the South China sea, with natural gas expected to start flowing late this year or early next.

“The Liwan gas project gets into the home stretch this year,” said CEO Asim Ghosh on a conference call with analysts.

“Our next big milestone is just around the corner.”

The 30,000-tonne, 41-metre-high above-sea structure is currently moving via barge to its final location 300 kilometres southeast of Hong Kong.

In a few weeks, it will be installed to what’s called the central platform jacket, a 200-metre-high structure that’s attached to the sea bed.

Ghosh used two Calgary landmarks to illustrate the enormity of the task at hand.

“If you place the Palliser Hotel on top of the Calgary Tower, that’s about the physical size of what the finished structure will look like.”

The gas will be sent 260 kilometres to be processed in an onshore gas plant and sold in mainland China.

As of the end of the first quarter, Liwan was 85 per cent complete.

Husky, majority owned by Hong Kong billionaire Li Ka Shing, is developing the Liwan field alongside China National Offshore Oil Co.

Also Tuesday, Husky said its first-quarter profit was down from a year ago as the price for its heavy crude oil came under pressure.

The company said it earned $535 million, or 54 cents per diluted share, down from $591 million, or 60 cents per diluted share, a year ago.

Revenues net of royalties were $5.6 billion, down from $5.77 billion.

The results were in line with analyst estimates, according to Thomson Reuters.

Production in the quarter amounted to 321,000 barrels of oil equivalent per day, compared with 320,000 boepd a year ago.

The company’s average realized price for its crude oil, natural gas liquids and bitumen in the first quarter was $68.32 a barrel, compared with $87.11 a barrel in the first quarter of 2012.

Husky’s U.S. refinery interests help act a cushion against lower oil prices because it means a cheaper raw product.

“Our integrated business model continues to provide a safe harbour,” said Ghosh. “In effect, we’re capturing world pricing for our Western Canada oil production.”

In the oilsands, the first 60,000-barrel-per-day phase of Husky’s steam-driven Sunrise project is about two-thirds complete. The $2.5-billion project, part of a joint venture with BP PLC, is slated for startup in 2014.

Husky is also in the early stages of exploring an oil shale formation in the Northwest Territories called the Canol.