|
Alberta oil sands: It’s not over ‘til it’s over A few voices speak out for future of Alberta oil sands, citing need for liquid fuel, dropping construction costs, new technology Gary Park For Petroleum News
In the rush to count the Alberta oil sands down and out there are a few lone voices suggesting otherwise.
Peter Tertzakian, chief energy economist and managing director at Calgary-based ARC Financial, said any hasty attempts to rule out the oil sands as part of the world’s future energy needs — even if the rate of development is scaled back — is as “imprudent” as the claims of one U.S. investment bank analyst who predicted the northern Alberta resource was on its way to 10 million barrels per day.
“Don’t bet against the need for oil just because recessionary forces have muted demand,” he wrote in the Calgary Herald.
“And fuel cell cars are nowhere to be seen yet,” he said, referring to a “ludicrous” 2000 claim that one million commercial fuel cell vehicles would be on the road by 2010, when the actual number is about 200 demonstration units.
Tertzakian also noted that major oil sands operators have deferred or shelved about C$50 billion worth of projects and small companies are no longer “throttling up” to full-steam ahead; the cutbacks mostly affect upgrading projects — the most capital-intensive component of the whole oil sands business.
He said that before the financial crisis hit, there were hopes that, within a decade, 75 percent of Alberta’s bitumen production would be upgraded in the province from 60 percent today.
Tertzakian said that’s not only an unlikely goal now, but is betting Alberta will only account for 55 percent of upgrading by 2015.
He said it is also clear that production forecasts will be trimmed as multi-billion dollar projects are stopped or scaled back.
Shell cites falling costs But Tertzakian’s case for not being too hasty in burying the oil sands got some backing from Royal Dutch Shell’s Chief Executive Officer Jeroen van der Veer, who said falling construction costs may allow his company to revisit plans to expand its oil sands projects.
He told an energy conference in London on Dec. 19 that Shell expects “procurement costs will come down quite a lot,” which in turn would lower the breakeven costs for an oil sands project.
He said Shell will proceed with projects that could be profitable under various scenarios for oil prices, but was reluctant to say when that might happen.
Petrobank files application Down the chain from Shell, Petrobank Energy and Resources filed an application Dec. 18 to build a commercial project utilizing its proprietary thermal recovery technology to recover 10,000 barrels per day of partially upgraded bitumen.
Chief Executive Officer John Wright said that if the application is approved “in a reasonable time period, we could be building it by the end of 2009.”
He said a capital budget has yet to be developed, although he predicted it would be about half the cost per flowing barrel of comparable projects, which range from C$35,000 to C$50,000 per barrel.
Justin Bouchard, an analyst for Raymond James, said it is a smart move by Petrobank to press ahead now, given that approvals are taking about 18 months, adding that results from Petrobank’s existing demonstration oil sands project shows it could be profitable even at current commodity prices.
The commercial demonstration project planned by Petrobank for its Whitesands leases could be the first stage of a project scheduled to grow in stages to100,000 bpd.
| 