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Petro-Canada exec repeats request for oil sands database Sangster wants Alberta-wide database to help control construction costs Kay Cashman Petroleum News Publisher & Managing Editor
The lack of an Alberta-wide database containing construction cost information for oil sands projects was cited as a factor in Syncrude Canada’s $2.1-billion cost overrun on a 100,000 barrel-a-day plant expansion announced in early March. At that time Petro-Canada oil sands Senior Vice President Brant Sangster was challenged at a Toronto symposium by investors who were concerned that the overrun would cost Petro-Canada C$235 million to cover its 12 percent stake in the Syncrude operation.
Sangster explained that oil sands costs have soared because engineering contractors have based their forecasts on projects in the U.S. Gulf of Mexico, not the vastly different environment of northern Alberta.
He said estimates had been made before the engineering work was completed and suggested the Alberta government could help by compiling project-management information, without disclosing the identity of the sources.
Rich Ballentyne, president of Terasen Pipelines, told the Financial Post that Syncrude woes could deter investment in the oil sands and delay plans to build pipelines, warning that if Syncrude was having trouble controlling its budget newcomers could face tough challenges. Database would be controlled by provincial government According to press reports, Sangster reiterated his request for a database for oil sands construction projects on March 30 to the attendees of the Canadian Energy Research Institute conference. He said he’d like to see a database created by a joint partnership between the Alberta government, oil producers and contractors involved in oil sands facilities construction.
“It feels to me that we could benefit from it, because there’s all this work that’s been done in Alberta and we understand what it costs to do these things in Alberta,” he said, noting again that there is a big difference between construction costs in the harsh northern Alberta oil sands and the southern Gulf Coast of the United States.
Given the oil industry’s sensitivity to disclosing cost details to competitors, Sangster said numbers would have to be anonymous and the database managed by the provincial government.
Editor’s note: In addition to Syncrude’s cost overrun of $2.1 billion for a total of $8.1 billion – double the original cost estimate for the phase three expansion when it was announced in 2001 — project completion was also pushed back by almost a full year.
—Gary Park, Petroleum News Calgary correspondent, contributed to this story
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