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Alberta's oil sands refuse to wilt Latest news involves Kuwait Oil’s scouting trip, Western Oil Sands takeover rumors, Teck Cominco’s oil sands output projections Gary Park For Petroleum News
Regardless of how much they come under attack, the Alberta oil sands show no signs of taking a time out.
In the latest flurry of developments:
• Kuwait Oil Co. made a scouting trip to Canada, looking for expertise to develop the heavy oil reserves held by the Persian Gulf country.
• Shares of Western Oil Sands made a spurt amid rumors that Total, Royal Dutch Shell, Chevron or Korea National Oil Corp. could enter a bidding war to take control of the junior partner in Shell’s Athabasca project.
• Canadian zinc and copper mining giant Teck Cominco served notice it hopes to produce 140,000 barrels per day from the oil sands within a decade.
Kuwait looking for expertise The state-owned Kuwaiti company left no doubt that it sees term contracts with Canadian oil service companies as the key to unlocking its northern heavy oil reserves and reaching a goal of 900,000 bpd by 2020.
“We are on a learning curve and are in Calgary to get a better grip on the heavy oil industry,” KOC deputy managing director for finance Ali al-Shammary told the Calgary Herald.
“Unless we seek the experience of the industry here, we will not be able to reach our target.”
Once deals are in place to deploy new drilling technologies, as well as provide rigs, compressors and submersible pumps, along with skilled workers, KOC said it will be open to linking up with international companies to develop its reserves.
Al-Shimmary said Kuwait has the potential to match output from Saudi Arabia’s offshore Manifa project, the largest single heavy-oil venture in the world.
He said a pilot project could be pumping 50,000 bpd by 2011, expanding to 250,000 bpd by 2015 and 900,000 bpd within 13 years.
KOC has budgeted spending of US$27.8 billion for upstream oil development to meet its 2020 production target.
Total named as possible buyer for Western Oil Sands Having already said that outright sale is one of its options, Western grabbed the spotlight June 15 when a brief item in a French business newsletter said France’s Total was ready to bid for the junior producer and had hired Merrill Lynch as its advisor — a claim the U.S.-based investment bank would not comment on.
Having set a goal of producing 500,000 bpd from the oil sands by investing US$15 billion, Total has been accumulating assets, taking over as operator of the proposed C$9 billion Joslyn project and teaming up with ConocoPhillips in the Surmont project.
But acquiring Western’s 20 percent stake in Athabasca would put Total in the usual position of being the junior partner to operator Royal Dutch Shell, which owns 60 percent of the project, with Chevron Canada holding the balance.
Most analysts believe it makes more sense for Total to either take full control of projects or at least be the operator.
However, what Total brings to the table is experience in Venezuela’s heavy oil plays and a possible answer to Western’s search for access to upgrading facilities as Athabasca embarks on substantial expansion from its initial 155,000 bpd to somewhere in the range of 770,000 bpd to 1 million bpd.
The speculation propelled Western’s shares to a 7 percent gain on June 15 pushing its market capitalization to about C$6 billion, just two days after Western Chief Executive Officer James Houck said the efforts to “maximize value” from the company’s assets have generated a number of quality opportunities.
He said current expansion work at Athabasca will add 100,000 bpd of output, work is proceeding on an upgrader near Edmonton and construction has started on a 456,000 bpd pipeline from the Athabasca site to Edmonton.
Teck Cominco acquires land Teck Chief Executive Officer Don Lindsay said recent land acquisitions should see his firm grow beyond its 15 percent stake in the proposed Fort Hills project led by Petro-Canada.
“We think we can develop an oil sands business that could give Teck a (net) 140,000 bpd in a 10-year period,” he said.
Since joining Fort Hills in 2005 “we’ve picked up other land positions, which we are very excited about,” Lindsay said.
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