Husky Energy on course for Liwan natural gas startup

Husky Energy Inc., the Canadian company controlled by Hong Kong billionaire Li Ka-shing, said Wednesday it's on schedule for the startup of its massive Liwan natural gas project.

Speaking to analysts and reporters via conference call during its overview of 2013 results and fourth-quarter performance, Husky CEO Asim Ghosh said despite a long and active typhoon season in the South China Sea, the company, Canada's third largest integrated oil producer, worked its way around the conditions in the largest project it has ever undertaken.

"Most of what is weather sensitive is now behind us," said Ghosh, who explained the final subsea equipment was now installed. "It's (now) literally kind of the finishing touches of testing the seals, pressurizing the system, clearing out the water from the pipes and replacing with nitrogen, that sort of work."

China's largest natural offshore gas field was discovered in 2006, about 350 kilometers southeast of Hong Kong in the Pearl River Basin. It is estimated to contain four to six trillion cubic feet (about 113 billion to 170 billion cubic meters) of gas. The Alberta-based Husky Energy is the field operator in the Liwan 3-1 gas field, working in partnership with China National Offshore Oil Corporation in its development.

Husky chief operating officer Robert Peabody said the project had moved at a brisk pace, noting it had only been seven years since the Liwan field was discovered.

"That's a remarkably brief window in the offshore industry, considering all the steps involved, including initial appraisal, the design of the facilities, testing, regulatory approvals, construction and commissioning," he said. "When production is achieved shortly, it will flow directly into the fastest growing energy market in the world."

Helped by an 11 percent rise in U.S. crude prices, Husky beat market expectations in the fourth quarter of 2013 when its adjusted quarterly earnings were 412 million Canadian dollars (one Canadian dollar is equal to 0.9. U.S. dollar), down 15 percent from 487 million Canadian dollars a year earlier.

During the quarter, U.S. crude futures averaged 97.46 Canadian dollars per barrel compared to 88.18 Canadian dollars a year earlier.

The company said its net income fell to 177 million Canadian dollars for the last quarter, from 474 million dollars a year earlier. The figure reflected a non-cash, after-tax impairment charge of 204 million dollars for its natural gas properties in western Canada.

The company also reported its first sale into the Indian market. During the fourth quarter, state refiner Indian Oil Corp. purchased one million barrels of crude from Husky's White Rosefield offshore project in Newfoundland and Labrador. Ghosh said the sale was India's first purchase of Canadian crude and the company's light oil had been approved for use in Indian refineries.

"This was a test sale of a certain quality of crude," he said. "We are now qualified for the state-owned sector in India."