Synenco has Northern Lights dancing

Unshaken by a massive rise in its upstream mining and extraction budget, Synenco Energy has approved a 2007 capital budget for its Northern Lights oil sands project of C$235 million, up from C$118 million in 2006.

The start-up company holds a 60 percent stake and is operator of the project. The balance is held by a Canadian arm of China’s Sinopec.

This year’s spending is earmarked for engineering, regulatory applications and other pre-construction costs.

It expects to start production in 2010 and recover 1.3 billion barrels of bitumen at a peak rate of 100,000 barrels per day over 30 years.

But the partnership has stirred controversy by announcing it plans to fabricate modules weighing 2,000 tons in Asia, thus lowering its mining and extraction costs from its most recent estimate of C$5.6 billion (itself a startling rise from an initial C$1.7 billion), while reducing the field construction workforce in Alberta to 900 from 2,000.

The move to take construction offshore poses a challenge for Alberta’s new Premier Ed Stelmach, who is a vigorous advocate of keeping as much of the value-added aspects of the oil sands within the province.

—Gary Park