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Company testing the waters with new oil sands technology
Gary Park Petroleum News Calgary correspondent
The Canadian oil sands subsidiary of an Israeli-U.S. engineering and manufacturing company is gearing up to take the plunge early in 2004 into equity and debt markets to finance its share of a C$3.2 billion project in northern Alberta.
OPTI Canada is a joint partner with Nexen in the Long Lake project which will include a field upgrading facility incorporating a patented OPTI technology that will eliminate the need to purchase natural gas and electricity, one of the heaviest cost burdens in the oil sands sector.
Based on a demonstration project that was launched in spring 2001, OPTI has calculated that it can produce synthetic crude at a cost of C$6-$7 a barrel, at least C$5 below other projects that integrate extraction with upgrading.
OPTI is now poised to test investor confidence in its technology by seeking financial backing for what is described as one of the largest packages — C$500 million initial public offering, C$800 million in debt financing and C$400 million in private equity — for a start-up resource company. Final decision likely in February Nexen has indicated it will likely make a final decision in February on whether to proceed with Long Lake, which is expected to come on stream in 2007 at 70,000 barrels per day and double that output by 2011, tapping into a lease with 5 billion barrels of oil-in-place.
OPTI’s parent company is the Ormat Group of Companies, which trades on the Tel Aviv Stock Exchange and is considered a world leader in remote power generation systems using renewable energy sources.
The technology converts bitumen into partially upgraded sour crude oil and asphaltenes, which can in turn be converted into hydrogen-rich, low energy fuel gas.
As part of the deal, Nexen has a 50 percent interest in the bitumen property, the exclusive right with OPTI to use its technology in the Athabasca oil sands region and the right to use the technology elsewhere in the world.
OPTI President and Chief Executive Officer Sid Dykstra has said large-scale oil sands developments offer “great economics when combined with a low cost fuel source and an upgrading solution.”
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