|
Sands answer to Shell reserve woes? Shell Canada is partner in possible C$17 billion investment over next 10-12 years; U.S. President George Bush sees Canada’s oil sands as a chance to reduce overseas dependency Gary Park Petroleum News Calgary Correspondent
With Royal Dutch/Shell Group’s reserves mess casting a cloud over the company, Shell Canada may have a multi-billion dollar solution to offer its parent company.
The Alberta oil sands could be the needed course correction for Royal Dutch/Shell, which has lowered its proven reserves figures five times in a little over a year.
Even more importantly, President George W. Bush acknowledged the oil sands as a way for the United States “to become less dependent on energy from overseas.”
At his March 23 summit with Canadian Prime Minister Paul Martin and Mexican President Vicente Fox, Bush said the United States appreciates that the oil sands “are now becoming more economical,” giving the United States access to another 1 million barrels per day, growing to another 2 million bpd.
Martin also referred to the oil sands as a “great, great opportunity.” Athabasca investment could be C$17 billion In a filing with the Alberta Energy and Utilities Board on March 24, Western Oil Sands, a junior partner with Shell Canada and Chevron Canada Resources in the Athabasca oil sands project, pointed to a possible investment of C$17 billion over the next 10-12 years to push the venture’s output from 155,000 barrels per day to 500,000-600,000 bpd.
Talks by the trio include a four-phase expansion, with each stage costing C$4 billion-$4.5 billion, a boosting production by 90,000-100,000 bpd.
The disclosure was originated by Western Oil Sands, which holds 20 percent of the Athabasca project.
Shell Canada was reluctant to commit at this stage to a timetable, or confirm Western’s figures.
But a C$17 billion undertaking would leave the partnership’s oil sands peers in the dust.
Topping the current list are Canadian Natural Resources and Suncor Energy, each with recent announcements pointing to C$10 billion-plus investments. Uncertainties: mining, extraction, upgrading For now, Shell is unwilling to commit beyond its plans for the next five years, when it hopes to remove bottlenecks in the mining, extraction and upgrading systems and open new mining leases to raise bitumen production to 270,000-290,000 bpd.
However, it has referred to broad outlines to exploit five leases in pursuit of 500,000 bpd, without setting any target dates.
Western President and Chief Executive Officer Guy Turcotte told the Globe and Mail that the next generation of oil sands projects requires “some comfort” that long-range oil prices will remain comfortably above US$25-$30 per barrel.
However, what goes hand-in-hand with the relative certainty of oil sands reserves is the uncertainty with the mining, extraction and upgrading facilities.
Athabasca debuted two years ago to a fire and explosion at its mine site and has been grappling over several months with mishaps at its Scotford upgrader near Edmonton.
The upgrader, which turns bitumen into refinery-ready crude, had a partial shutdown late last year, losing about 65 percent of capacity, and had another outage on March 22 when one of two production trains was taken out of service, lopping a projected 25 percent off March output.
| 