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Sands projects get regulatory clearance Alberta government gives go ahead for 3 projects; some C$4 billion would be required to reach startup; bitumen at lowest ebb GARY PARK For Petroleum News
Pie-in-the-sky or not, the Alberta government has given the go ahead to three oil sands projects that would require about C$4 billion of combined investment to reach the startup stage.
But the approvals come when the northern Alberta bitumen resource is at its lowest ebb, with the prospects even bleaker than they were before the first commercial output started in 1967 as heavy crude falls out of favor with investors.
It hasn’t helped that the Organization of Petroleum Exporting Countries and the International Energy Agency concur that the global glut of crude oil is a long-term prospect, with increased production forecast to outstrip demand by about 760,000 barrels per day this year and surge even more next year outside of OPEC.
The IEA said Europe’s unexpected rise in consumption has vanished, the United States momentum has slowed dramatically and the “recent pillars of oil demand growth - China and India - are wobbling.”
Offering its most optimistic assessment, IEA said “we may have to wait a while longer” for markets to regain balance.
Three companies That offers little encouragement to the three companies that have secured clearance in the oil sands.
BlackPearl Resources plans 80,000 bpd of production over 20-plus years from its Blackrod project, which has 180 million barrels of proved plus probable reserves and 453 million barrels of contingent resources; Surmont Energy’s Wildwood project, designed to produce 12,000 bpd over 25 years, using thermal recovery methods; and Husky Energy’s 3,000 bpd Saleski venture that has yet to receive corporate sanctioning.
Surmont Chief Executive Officer Mark Smith noted that reaching this point has, on top of the technical work needed to assemble a regulatory application, taken three years of multiple environmental assessments and consultations with local communities, compounded by changes to regulations, notably the Alberta government’s cap of 100 million metric tons of greenhouse gas emissions from the oil sands.
“It has taken a lot longer than we imagined it would,” he said.
Husky offered a noncommittal response on the outlook for Saleski, with a spokesman saying plans for a pilot venture will be reviewed “in light of our current budgeting process.”
First approvals since Cold Lake The approvals from the Alberta Energy Regulator are the first for oil sands projects in the past year since Devon Canada got a green light for a 9,000 bpd venture near Cold Lake in northeastern Alberta.
A new study by the right-wing Fraser Institute said the proposed cap on GHG emissions would reduce production potential for the northern Alberta region by more than 3 million bpd between 2025 and 2040, costing the Canadian economy more than C$250 billion in lost output while contributing only a meager reduction of 0.035 percent in emissions.
Even if the intensity of emissions from the oil sands was reduced by new technology, the cumulative lost value of production would still be C$150 billion over the 15-year period, the institute said.
The study said “you are looking at a measure that is going to cost hundreds of billions to avert a tiny amount of global greenhouse gases ... so, by any measure, there are vastly more efficient ways to reduce (emissions).”
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