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Two more projects join oil sands stampede Nexen, OPTI Canada roll out plans for three-phase expansion at Long Lake; Shell Canada looks at Peace River expansion costs Gary Park Petroleum News Canadian Contributing Writer
There is no sign of an end to the flood of oil sands projects. Just the reverse.
Two more mega-projects are coming to life.
Canadian independent Nexen and technology partner OPTI Canada have rolled out preliminary plans for a three-phase expansion of their Long Lake project involving more than C$10 billion in capital investment to reach 240,000 barrels per day by 2015.
Separately, Shell Canada is giving a vote of confidence to the future of oil prices by breathing fresh life into a 25-year-old project in northwestern Alberta.
It is weighing the merits of turning an 8,000 bpd venture in the Peace River area into a 100,000 bpd operation. Long Lake would come on in ‘06 Long Lake is scheduled to come on stream in late 2006 at a cost of C$3.5 billion and producing 60,000 bpd of synthetic crude.
In outlining progress on Canada’s fourth integrated extraction and upgrading oil sands venture, OPTI said the joint-venture has its sights set on three further stages, each adding 60,000 bpd, with construction starting in 2008, 2010 and 2012.
Long Lake will be the fourth integrated extraction and upgrading oil sands project, although it will be the first to rely on steam-assisted gravity drainage, which involves melting deep bitumen deposits, allowing them to flow to the surface.
Using OPTI’s patented technology, the process will virtually eliminate the need for natural gas, giving OPTI confidence that Long Lake will be profitable even if crude drops below US$30 per barrel.
OPTI Chief Financial Officer George Crookshank said the prospect of high oil prices over the long term underpin the case for expansion, although the shortage of skilled construction labor is a worry.
Long Lake is already employing workers from the Christian Labour Association of Canada, which offers better terms than traditional unions, and one contractor, Ledcor Industries, has permission to import foreign workers to the oil sands. Peace River barely beyond experimental Shell Canada Senior Vice President Ian Kilgour said market price signals for oil suggest “there is a pretty robust opportunity” for the Peace River heavy oil project that has barely moved beyond the experimental stage since 1979.
He said cost estimates are being developed for a three-phase expansion, starting with construction in 2007.
The company currently favors cyclic steam stimulation to extract the bitumen, similar to technology used by Imperial Oil at its 145,000 bpd heavy oil operation at Cold Lake in northeastern Alberta.
Wilf Gobert, vice-chairman at Peters & Co., told the Financial Post that advances in oil sands technology have improved Shell Canada’s confidence level, but the “No. 1 change is the world price of oil.”
Other companies that are now showing interest in the Peace River region include BlackRock Ventures (which has been producing for the past two years), Penn West Energy Trust, Murphy Oil, Duvernay Oil and Koch Exploration. Other landholders are Japan Canada Oil Sands, Canadian Natural Resources and Husky Energy.
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