|
Conoco’s grand oil sands dreams
Gary Park For Petroleum News
ConocoPhillips has set its sights on becoming Alberta’s leading oil sands producer, having made its debut as operator of the Surmont project, a joint venture with the Canadian subsidiary of France’s Total.
Rating the resource as a vital part of North America’s energy security, the company expects to convert its industry-leading land position into 1 million barrels per day over the next 20 years, Canadian oil sands Senior Vice President Murray Fox told reporters.
He made the forecast after ConocoPhillips started commercial production at its 25,000 bpd Surmont facility.
Fox said the joint venture expects to complete basic engineering for the second phase of the thermal project in the first quarter of 2008 and reach the project sanctioning stage in mid-2009 that is designed to boost Surmont output to 100,000 bpd by 2012-13.
He has little doubt that Surmont will expand beyond its second phase, given the “significant strategic position” ConocoPhillips has taken in the oil sands. Its initial holdings were acquired as part of its takeover of Gulf Canada Resources.
Target above goals of peers Setting 1 million bpd as its eventual target pushes the company far above the goals of its peers, including Royal Dutch/Shell at 770,000 bpd, Syncrude Canada 550,000 bpd, Suncor Energy 500,000 bpd, Canadian Natural Resources 500,000 bpd, Husky Energy in the range of 500,000 bpd and Imperial, along with sister company ExxonMobil Canada, 300,000 bpd.
Fox said the start of commercial production at Surmont is the “first step on a long journey to something that is really, really important,” driven by his company’s conviction that oil sands production must “come to market for energy-security reasons and to meet demand.”
That view is reinforced by ConocoPhillips; decision in 2007 to abandon its heavy oil assets in Venezuela’s Orinoco belt after President Hugo Chavez unilaterally changed contracts.
In addition to Surmont, ConocoPhillips is sole owner of leases at Saleski, Thornberry and Clyden.
But the focus remains on Surmont, where Fox said the startup phase — often accompanied by major mechanical problems at other projects — has proceeded safely over the past six weeks.
Shipment to U.S. refineries Diluted bitumen from Surmont will be shipped to ConocoPhillips refineries at Wood River, Ill., and Borger, Texas, which are being upgraded to process Canadian heavy crudes under a joint venture to develop EnCana’s Foster Creek and Christina Lake properties, which give a substantial lift to ConocoPhillips’ production targets.
“There will be very significant growth here over the next five and 10 years as we ramp up production in the (EnCana) joint venture and Surmont and start to invest in other land positions,” he told the Financial Post.
Total E&P Canada President Michael Borrell said in a statement Surmont is a “key part of Total’s integrated strategy for the oil sands.”
Total is also 84 percent operator of the Joslyn lease, with Enerplus Resources Fund and Laricina as partners.
A proposed 100,000 bpd North Mine project is on track for startup in late 2012 or 2013 and Total is in the early stages of seeking regulatory approval for an upgrader in the Edmonton area.
Fox said that although ConocoPhillips has no plans to build its own upgrader in Alberta, he did not rule out that possibility as the company develops its 20-year growth plans.
He said the royalty increases proposed by the Alberta government have hurt the oil sands, but ConocoPhillips believes the impact can be softened through advances in technology.
| 