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European giants buck EU fuel label Total, Statoil, counter pressure to label oil sands crude ‘dirty oil’; Total says both Northern Gateway, TransMountain lines needed Gary Park For Petroleum News
France’s Total and Norway’s Statoil, two of the largest European-based oil companies, are countering pressure from the European Union to redraw a fuel standard by labeling oil sands crude as “dirty oil.”
Gary Houston, vice president of midstream for Total’s Canadian unit, told a Calgary conference that Enbridge’s Northern Gateway pipeline and Kinder Morgan’s TransMountain pipeline expansion will both be needed by 2020 in addition to new capacity to the Texas Gulf Coast as oil sands output climbs to 3.5 million barrels per day.
He said Total thinks both pipelines to the British Columbia coast “make sense … and there will be sufficient supply for both.”
Houston said that once oil is loaded on tankers it costs about $2 per barrel for shipment to China and $3 anywhere else in the world.
“It gives you instant access to world prices plus or minus $2 and that’s what we need to provide some price stability to our industry,” he said.
Through partnerships, Total is developing the Joslyn North mine and Voyageur upgrader as well as the Surmont, Northern Lights and Fort Hills projects, with planned spending of C$20 billion over the next decade and net production of 200,000 bpd by 2020.
But he warned that even if TransCanada’s Keystone XL project and Enbridge’s proposed 400,000 bpd Flanagan South pipeline go ahead, the industry will run out of pipeline capacity in 2016-18.
Norway: More transparency needed Norway’s Energy Minister Ola Borten Moe told reporters in Alberta that the EU needs to be more “transparent and open” on the issue of its fuel directive by taking a closer look at improvements made by companies in reducing greenhouse gas emissions levels in Alberta crude.
Although he stopped short of giving unqualified support for investment in the resource by 65 percent state-owned Statoil, Borten Moe said he was leaving Alberta with a good impression of efforts being made to clean up operations.
He also said Statoil’s short-term objective of increasing its oil sands production from 19,000 bpd to 60,000 bpd by 2016 on its way to a targeted 200,000 bpd by 2025 “is in line with their mandate.”
Statoil’s Canadian President Lars Christian Bacher said the minister posed tough questions about the oil sands sector, but is open to a dialogue based on facts.
Borten Moe said the Norwegian government’s view is that the ultimate goal should be to cut global GHG emissions, not penalize individual fuel sources.
Other developments Other oil sands developments included:
• A regulatory filing by privately owned Laricina Energy for a three phase 150,000 bpd commercial development at its Germain lease in Alberta, adding to an already-approved 5,000 bpd project. The second phase of 30,000 bpd is estimated to cost up to C$1.5 billion, and come on stream in the third quarter of 2015, with the next two phases of 60,000 bpd each starting in 2018 and 2021.
• Alberta government approval of an application by Grizzly Oil Sands Resources to build an 11,300 bpd bitumen extraction and processing facility, with output scheduled for mid-2013. The first phase has a price tag of C$400 million.
• Koch Exploration Canada got regulatory approval to build and operate a 10,000 bpd facility in the Cold Lake area, forecasting a production life of 25 years.
• North West Upgrading is considering fast tracking its planned 150,000 bpd bitumen-to-diesel plant, with a final investment decision expected in early 2012. The joint venture with Canadian Natural Resources carries an estimated cost of C$5 billion and will draw 37,500 bpd of feedstock from the Alberta government’s royalty-in-kind program.
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