Japan buys 2nd stake in Alberta oil sands

The Japanese have taken their second stake in the Alberta oil sands, while the French may be backing off.

For an investment estimated at about C$200 million, Inpex Holdings, Japan’s largest oil explorer, has acquired a 10 percent interest in the Joslyn project, operated by France’s Total.

In the process, Total has shrunk its share to 74 percent and says it is open to taking another cut if another strong partner surfaces, allowing the company to spread its risk.

However, Michael Borrell, president of Total’s Canadian unit, emphasized that Total did not seek out Inpex.

Total has previously indicated it plans to invest up to C$15 billion in the oil sands, shooting for output of 500,000 barrels per day.

With 36 percent of its voting shares held by the Japanese government, Inpex, which was establish 40 years ago, is an active E&P company in Indonesia, Australia, Kazakhstan, Azerbaijan, the Middle East and South America.

Its “first direct participation in a large-scale unconventional oil development project will contribute to Inpex’s long term and stable production,” it said.

First phase 100,000 bpd

There are tentative plans in the works to raise that level to 230,000 bpd before 2015.

Although Borrell said Total remains convinced there is “significant value” in the oil sands, Alberta’s planned royalty increases could make life a “little more difficult.”

Inpex makes its oil sands entry 30 years after Japan Canada Oil Sands (owned 5 percent by Inpex) signed a farm-in agreement with Petro-Canada, Nexen and Imperial Oil for assets in four leases.

It is currently working on a three-year seismic and delineation program to drill more than 100 wells as a major step towards starting a commercial operation with capacity of 35,000 bpd. Its leases hold about 2 billion barrels.

A current demonstration plant at Hangingstone produced about 8,000 bpd of bitumen and has approval to peak at 11,000 bpd.

—Gary Park