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Little guy in ‘big boys’ game’
Connacher Oil and Gas has achieved the first stage of its goal to be a minnow swimming with whales.
It commissioned a 10,000 barrel-per-day processing plant at its Great Divide project on Aug. 10 and is now chasing a further three stages to raise output to 50,000 bpd within five to seven years.
Launching its new mini oil sands project came only three years after Connacher paid a mere C$1.3 million for a lease it anticipated exploring for natural gas only to find it was sitting on substantial bitumen deposits.
The so-called Pod One facility cost only C$294 million to develop, with budget overruns held to C$34 million — the sort of result that large-scale oil sands players, many of whom have swallowed overruns of 50 percent and more, can only dream about.
Gusella: success from modular approach Connacher Chief Executive Officer Richard Gusella said his company has shown that a smaller company can “play in the big boys’ game,” by taking a modular approach to construction and assembling large parts of the plant offsite, away from the overheated economy of the oil sands region.
He said that allowed Connacher to handle the construction in a more expeditious manner than some of the mega-projects and affirmed its “more nimble and aggressive” approach.
Financing for Pod One included a C$180 million credit facility from BNP Paribas, one of Europe’s leading banks.
Pod Two, which could push production to 25,000 bpd, is expected to cost about C$300 million and is already before Alberta regulators.
The company took steps in early 2006 to shield itself against crude price fluctuations by acquiring a 9,500 bpd refinery in Great Falls, Mont., from Holly Corp.
It is now eying a 50,000 bpd, C$100 million pipeline, possibly in partnership with others companies in the Great Divide area, to connect future production to markets.
—Gary Park
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