Oil sands leaseholders unhappy

Oil sands producers in Alberta used to take for granted that what they wanted from government they got. Not anymore.

In the latest setback delivered to the industry, the Alberta government has cancelled 32 leases owned by 10 companies and covering 55,000 acres to make way for new urban expansion of Fort McMurray, a city of 70,000 that is the oil sands hub.

The owners will be compensated for what they paid to acquire the leases, as well as development, reclamation and interest allowances.

The Canadian Association of Petroleum Producers endorsed providing the extra land for Fort McMurray, but believes the compensation will be inadequate because it will not cover the value of what would have been produced.

The affected companies are: Alberta Oil Sands, Cavalier Land, Cenovus Energy, E-T Energy, Grizzly Oil Sands, Koch Oil Sands, Laricina Energy, Scott Land and Lease, Suncor Energy and Value Creation.

Laricina alone will lose eight leases containing almost 1,300 acres it has fully delineated as part of the company’s plan to develop a thermal-recovery project producing about 25,000 barrels per day, said Laricina Chief Executive Officer Glen Schmidt.

The property is also due south of almost 7,000 acres acquired five years ago from Talisman Energy by Ivanhoe Energy, which has been working on its own plans for a thermal-recovery operation.

Schmidt suggested the government’s consultations with the companies were “probably less effective” than those with the community.

Energy Minister Ken Hughes said the objective is to create “an even better quality of life for the residents of Fort McMurray, a thriving community that is expected to more than double in population by 2030.”

—Gary Park