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Kyoto treaty still troubles Imperial Other companies unveil wave of new oil sands projects Gary Park Petroleum News Calgary Correspondent
Imperial Oil, Canada’s petroleum powerhouse, does not yet believe that Prime Minister Jean Chretien’s soothing assurances remove the risk to oil sands development posed by the Kyoto climate-change treaty.
Chretien sent a letter to the industry in July pledging that oil sands developers will carry no more than their share of Kyoto’s costs, but Imperial Senior Vice President Paul Smith told reporters at a Toronto investment conference Sept. 18 that the promise is “just a letter.”
Imperial would be more at ease with a signed “commercial agreement” to give it a clear understanding of the risks involved in projects whose life span will extend far beyond the initial 2008-2012 phase for implementing Kyoto.
He noted that Imperial is moving ahead with plans for its Kearl Lake project in northeastern Alberta — a possible C$7 billion, two-phase investment that could come on stream by 2010, ultimately produce 200,000 barrels per day and have an operating life of 70 years.
The project involves drilling this winter, followed by regulatory applications once there is a better fix on the commercial and engineering implications. Other projects gaining speed Meanwhile, a host of other ventures, big and small, are gaining speed, based partly on confidence that the Kyoto clouds are dispersing.
• Canadian Natural Resources is counting on regulatory approval before year’s end that will allow it to make a final decision by mid-2004 on its possible C$8.5 billion Horizon project. Company President John Langille said at the Toronto conference that he sees no major unanswered questions standing in the way of the venture that is targeted to produce 232,000 bpd by 2012.
• Devon Energy generated excitement by confirming it is moving ahead with its C$550 million Jackfish project, signaling an oil sands debut by a major U.S. independent. If all goes according to plan, Jackfish will come on stream in 2007 and reach peak production of 35,000 bpd in 2008, tapping into recoverable reserves estimated at 300 million barrels.
• Privately owned junior Deer Creek Energy announced plans to go public in 2004 to raise C$100 million to finance a major expansion of its bitumen production. Reinforcing the trend towards smaller undertakings and the growing use of steam-assisted gravity drainage technology, Deer Creek plans to start at 600 bpd in the second quarter of 2004, grow to 10,000 bpd in 2007 and reach final output of 30,000 bpd in 2009. The company figures Kyoto will add no more than 15 cents per barrel to its operating costs.
• Climbing aboard the oil sands bandwagon, the Fort MacKay First Nation, with 530 members and land 45 miles north of the “oil sands capital” of Fort McMurray, said it hopes to join the giants such as Syncrude Canada, Suncor Energy and Shell Canada. Assuming members ratify a land-claim settlement in an Oct. 23-24 vote, Fort MacKay will have control of 23,000 acres, including an oil sands lease. Although plans are in the early stages, the first nation is close to hiring an engineering firm to develop size and cost estimates.
• In another new wrinkle, Petrobank Energy and Resources has applied for regulatory approval of a pilot project to test a technology known as gravity fire-flood — which involves injecting air into the bitumen deposit, igniting a fire and thinning the viscous bitumen, with results that are similar to those achieved in a refinery.
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