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OPTI peddles upgrader technology Confident regional upgraders could give small oil sands operators an advantage by reducing market risks; junior company sees three possible upgrader sites in Alberta Gary Park Petroleum News Calgary Correspondent
OPTI Canada’s ambitions extend far beyond its planned joint venture oil sands project with Nexen.
The prospectus issued for its initial public offering, which raised C$301 million earlier this month to help finance its 50 percent share of the C$3.4 billion Long Lake project, shows OPTI has its sights set on building upgraders to process bitumen from the small oil sands operations expected to come on stream.
The junior company said it is probing opportunities to develop additional upgraders with other bitumen and heavy oil producers.
“OPTI believes that it is well positioned to construct one or more regional integrated OrCrude upgraders” to deal with an expected flood of bitumen on to the North American market, the company said.
OPTI was created to commercialize a patented bitumen and heavy oil upgrading process owned by Ormat Industries, an Israeli-based power and technology company. Market offers limited refining capacity It said the number of companies that plan to market non-upgraded bitumen is likely to grow significantly over the next decade, but producers are faced with a market that offers only limited capacity to refine heavy crude.
OPTI said that since OrCrude is a fully upgraded product, projects using the technology would have a competitive edge over those selling raw or diluted bitumen by minimizing the risks associated with heavy oil differentials, natural gas prices and diluent costs.
The prospectus suggest that possible locations for regional upgraders include the Hardisty pipeline hub which has access to the Enbridge pipeline system; the major pipeline and refining center at Edmonton; and Cold Lake, which includes Imperial Oil’s major heavy oil complex.
OPTI, which has license agreements with Nexen and Suncor Energy, said it could hold an interest in upgraders or sub-license the OrCrude technology to third parties. BA Energy also wants to build upgrader Calgary-based BA Energy is trying to break into the same field with plans to build a 50,000 barrel per day independent upgrader near Edmonton at a cost of up to C$800 million.
BA is owned by Value Creation, which holds oil sands leases and rights to a proprietary upgrading technology.
On the project front, three other pioneers are moving ahead with plans.
BlackRock Ventures said winter drilling has confirmed previous estimates of 1.6 billion barrels net of oil-in-place at its 52,000-acre Seal lease in northern Alberta. Two of the blocks holding 300 million barrels of oil in place have been approved for commercial development by the Alberta Energy and Utilities Board.
The company said it has so far recovered 170,000 barrels of oil from its first two horizontal wells without any appreciable decline in results from the wells.
Construction of a 58,000 bpd Seal pipeline was completed earlier this month and a heavy oil processing facility is expected to operate near its 10,000 bpd capacity sometime this quarter. Hearing date set for thermal recovery project Meanwhile, the Alberta Energy and Utilities Board has set June 29 to start hearing BlackRock’s proposal for its Orion thermal recovery project in the Cold Lake oil sands region.
The company has operated a 500 bpd steam-assisted gravity drainage pilot at Hilda Lake since 1997, producing more than 1.1 million barrels of bitumen.
The Orion project is scheduled to be developed in two phases, each producing 10,000 bpd of bitumen over a 30-year operating life, with the first phase carrying an estimated price tag of C$150 million.
Deer Creek Energy has started steam-assisted gravity drainage operations at its Joslyn project phase I plant, after completing a 195-well program on schedule and under budget.
The initial phase is targeting 600 bpd by mid-2005, although Deer Creek is hoping to go public this year and raise C$100 million to set the ball rolling towards 30,000 bpd in 2009.
Connacher Oil and Gas said it is considering a steam-assisted gravity drainage project involving 8,000-10,000 bpd of bitumen near Fort McMurray.
A drilling program was started in March at the Great Divide project, with a view to “early initial exploitation” of the resource, based on positive results so far.
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