Husky responsibly produces the energy the world needs. To ensure our business is resilient, we maintain strong financial discipline, with a focus on generating free cash flow and returns today, while investing in higher-margin growth opportunities. We identify, evaluate and invest in technology to improve environmental and financial performance.
In our Integrated Corridor, our production is linked with our Downstream capacity. It includes thermal production from our Lloyd thermal projects, the Tucker Thermal Project and the Sunrise Energy Project, as well as natural gas and associated liquids, integrated with the Lloydminster upgrading and refining complex, the Husky Midstream Limited Partnership (of which Husky owns 35% and is the operator), and the Lima, Superior and Toledo refineries in the U.S. Midwest.
Our Offshore production includes operations and exploration in the Asia Pacific region, primarily offshore China and Indonesia, and in the Atlantic region offshore Newfoundland and Labrador.
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Contributing to the Economy
Our focus on investing in higher-margin growth opportunities continues to lower our cost structure, generating free cash flow that can be returned to shareholders through a dividend, used to maintain the strength of our balance sheet or be re-invested in more growth. Our stability and long-term profitability allows us to contribute to the economies of the communities where we operate through jobs, supply contracts, taxes and royalties, and community investments.
In 2018 funds from operations were $4 billion, up 21% from the year before, cash flow from operating activities was $4.1 billion and we generated free cash flow for the year of $426 million. We spent $3.6 billion on capital projects, significantly benefitting the communities where we operate. We paid an annual cash dividend of $0.45. Operating cash spent in those communities, including services, materials and equipment, utilities and transportation, was $2.8 billion.
We directly employ more than 5,100 people in Canada, the United States and the Asia Pacific region through our integrated business, strongly contributing to the economies and the communities where we operate.
In addition to providing long-term, well-paid jobs throughout our operations, our contributions include:
- Purchasing goods and services from local businesses, including Indigenous vendors.
- Paying royalties and taxes to municipal, provincial, state and federal governments.
- Providing economic inclusion and business opportunities to Indigenous communities.
- Contributing to community and charitable organizations.
Business Resilience
With our low level of debt, low-cost structure, downstream integration and market diversification, which provide for stability of funds from operations, we are well positioned to compete and succeed in a volatile commodity price environment.
Our upgrading and refining capacity, long-term export pipeline access, along with storage and logistical assets, allow us to capture global pricing for the majority of our production, despite the record-high location and quality differentials for heavy oil seen in 2018.
We incorporate carbon-related costs, based on current and emerging policies in the jurisdictions where we operate, to help us understand the resilience of our current and proposed assets to changes in carbon policy and regulation.
Energy Use
To improve the efficiency of our operations, we are always looking at the most effective way to use energy. Reducing steam-to-oil ratios means we are using less steam, lowering our energy intensity and reducing both operating costs and air emissions intensity, including greenhouse gases (GHGs).
Since 2015, production at our Sunrise and Tucker operations has been growing at a rate greater than our energy use, resulting in overall declines in both total energy use intensity and Scope 1 GHG intensity.
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Innovation & Advanced Technology
Our investments in innovation and technology target improved safety and environmental performance, reducing costs and increasing resource recovery. We focus on developing and implementing technology that offers the highest potential value for our business, while also learning from peers. We have a number of critical competency networks that connect people across business units, exposing them to different technologies their colleagues are using. These networks are focused on innovation in such areas as carbon capture, water management, reservoir recovery, geoscience integration and business analytics.
The Husky Innovation Gateway, building on the expertise of our technical chiefs and other out-of-the-box thinkers from across the company, provides a coordinated approach to fostering innovation. We continue to work with employees to encourage ideas, while increasing their knowledge and skills through courses and hands-on experience.
Every year we hold a Technical Forum for employees, a session where emerging and existing technology is shared. In 2019 we are evolving the forum to include solving challenges our colleagues are facing, working with suppliers on relevant technology and ideas.
Our Technical Forum is evolving to help solve challenges our colleagues face.