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Alberta oil sands get another boost from U.S. interest Past month sees another C$12 billion of projects unveiled, with combined incremental production of more than 400,000 barrels per day over next 10 years Gary Park PNA Canadian Correspondent
Alberta’s oil sands promoters are responding to rising interest from the United States as they open up the investment taps on billions of dollars in new projects.
In the past couple of weeks, Vicki Bailey, an assistant secretary with the U.S. Department of Energy, and the New York Times have intensified the spotlight on Alberta, which already ships about 1.69 million barrels per day south of the 49th parallel.
Bailey, speaking to a Ziff Energy Group conference in Calgary, said the United States hopes to increase its imports of Canadian energy and sees the oil sands as a key element.
“The estimates of Canada’s recoverable oil sands reserves (about 300 billion barrels from a reserve of 1.7 trillion barrels) are substantial and their continued development could become a pillar of sustained North American energy and economic security,” Bailey said.
Her thinking was echoed last week in the New York Times, which said that for many American consumers “who fear the United States is overly dependent on OPEC, it may be a revelation to learn that Canada is a leading source of natural gas and crude oil.
“What is more, most of the natural gas and crude imported from Canada comes from one province, Alberta.”
One long-time Calgary oilman, who asked not to be identified, said all that needs to happen is for Americans to be “told we’re up here, that we’ve got the reserves and that the regulations aren’t going to be suddenly changed. Then they’ll come.”
The risk-takers are wasting no time placing their hopes in the oil sands, where more than C$40 billion worth of projects are in the works and in just the last month another C$12 billion have been unveiled.
Suncor to double synthetic crude production Suncor Energy Inc., which pioneered the development of synthetic crude in Canada, has laid the groundwork to more than double its output to 550,000 barrels per day by 2012.
Unshaken by heavy cost overruns on its newest expansion phase, the Calgary-based integrated company is moving ahead with its so-called Voyageur project, aiming to get regulatory approvals by 2004 and spend C$10 billion over 10 years.
Suncor’s Project Millennium is just finished and is scheduled to almost double current production to 225,000 barrels per day by the end of 2001, despite a price tag that soared to C$3.25 billion from C$2 billion as labor and materials costs climbed.
However, Suncor is counting on Millennium lowering its operating costs to between C$8.50-$9.50 per barrel from C$13.55 in 2000.
Mike Ashtar, executive vice-president of oil sands, said Suncor has incorporated many lessons learned from 34 years of producing synthetic crude “to run our operation very reliably and at a lower cost.”
Earlier this month, the Alberta Energy and Utilities Board approved Suncor’s new C$1 billion Firebag development, which will tap a 9.8 billion barrel lease and produce 35,000 barrels per day by 2005 and 140,000 barrels per day by the end of 2008.
For the first time, Suncor will switch from its traditional strip-mining of bitumen to steam assisted gravity drainage, injecting steam into deeper deposits to force the bitumen to the surface.
Mindful that the oil sands have been fingered as one of the major contributors to greenhouse gas emissions, Suncor intends to integrate the Voyageur project with a program to minimize air emissions, reduce water use and discharge, accelerate reclamation of mined areas and tailing ponds and limit land disturbance.
In a speech to the New York investment community earlier this month, Suncor Executive Vice President Mike O’Brien said the company can see 1 million barrels per day as a long-term goal through continuous expansion phases and provided fiscal and market conditions are favorable.
Nexen to build new plant Adding to the growing ranks of new operators, Nexen Inc. (formerly Canadian Occidental Petroleum Ltd.) has announced a joint venture with OPTI Canada Inc. to build a 60,000 to 70,000 barrel per day project in the Athabasca region of northeastern Alberta by 2006.
The project will also use steam-assisted gravity drainage technology, based on the success of a 500 barrel per day demonstration plant at the Long Lake lease, which holds about 5 billion barrels of recoverable bitumen.
As part of the C$1 billion first phase of the venture, Nexen has acquired a 50 percent interest in the Long Lake property and the exclusive right to use OPTI’s technology on other Nexen lands in Alberta and elsewhere in the world.
Established in 1999 to focus on the recovery and upgrading of Canadian heavy oil using new eco-efficient methods, OPTI Canada is a private company and a subsidiary of Israeli-based ORMAT Group of engineering companies.
Nexen president and chief executive officer Charlie Fischer said the OPTI technology, when combined with other existing commercial technology, solves the major challenges of a low-cost fuel source to drive large-scale projects and a cost-effective process to upgrade bitumen into a high-value light, sweet product.
He said Nexen’s bitumen resource is “so significant it could replace our current world-wide production of 210,000 barrels per day for more than 30 years.
“By providing a low-risk, low-cost, stable source of long-term production growth, bitumen reduces the overall risk of our portfolio and provides a strong cash flow base to sustain our global expansion plans,” Fischer said.
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