|
Oil Patch Insider Search for miner stumps oil sands partners; Agrium task force to deliver recommendations
Know anyone who can dig holes in the sand?
We’re not talking kids’ stuff on a summer beach.
This is about digging big, deep holes in gooey, black sand in often brutal winter conditions.
If you do, Petro-Canada and UTS Energy might like to hear from them.
The partners in a possible C$5 billion oil sands project are digging around in search of a possible partner with lots of mining expertise.
They want a company to remove as much as 4.7 billion barrels of raw bitumen from their 46,000 acre lease in northeastern Alberta at the rate of 100,000 barrels per day.
Teck Cominco, which has lots of experience in zinc, copper, gold and coal mines, has stepped forward.
But the Vancouver-based miner might be trying to drive too hard a bargain.
Petro-Canada and UTS don’t intend to give up their controlling interests in the Fort Hills project.
Teck Cominco isn’t interested in settling for a mere 10 percent stake.
“That’s too small for us,” said CEO Don Lindsay.
He pointedly remarked that 45 percent of an oil sands project’s operating costs are in mining the bitumen.
“Having 10 percent doesn’t make sense,” Lindsay said. Without specifying the “right number,” he said “it’s obviously significantly beyond that.”
Desjardins Securities analyst John Hughes said in a research note that Teck Cominco would be a “natural fit” as an oil sands partner and the market would take a positive view of such an investment because it would give Teck Cominco “an option on future oil prices.”
Apparently Petro-Canada and UTS aren’t falling over themselves to sign up Teck Cominco.
UTS CEO Will Roach told a Canadian Association of Petroleum Producers investment symposium that discussions are taking place with several mining companies, but that finding a suitable fit is taking longer than anticipated.
The Fort Hills owners had set June 30 as their tentative target date.
“We’re working hard right now,” said Roach. “If it takes us a little bit longer, then so be it.
“We’ll consider all offers on their merit.”
He didn’t rule out offering more than 10 percent, but the two partners have been emphatic that they won’t give up control.
If they fail to find working interest partners, Roach said it is possible they will opt for a long-term contractual arrangement to run the mine.
In the meantime, Petro-Canada and UTS expect to make a decision in the first quarter of 2006 on how and where they will upgrade the bitumen after they start operations in 2009 or 2010.
They seem to be leaning to the Edmonton refinery area, where Petro-Canada already has a plant and there is easy access to a large workforce.
Under the arrangement reached in March, Petro-Canada acquired 60 percent of Fort Hills for C$30 million and is expected to contribute about C$900 million towards the initial development phase of C$1 billion.
Beyond there, the joint venture has regulatory approval to expand to 190,000 bpd. Laird taking Houle’s place at The Alliance The Alaska Support Industry Alliance will get a new general manager as of July 5. Larry Houle is leaving and Paul Laird is taking his place.
Houle is headed to Wyoming with his family to pursue an advanced degree in construction project management. PN sources say he’s planning to return to Alaska, degree in hand, in time for the construction of the gas pipeline from Alaska’s North Slope.
Paul Laird, a former director of external communications for BP Exploration (Alaska), was well known in his BP days for the entertaining speeches he wrote for company executives.
Well liked by the press for his candor and sense of humor, in 2002 Laird received a Gold Quill Excellence Award from the International Association of Business Communicators in San Francisco for a speech he wrote for Richard Campbell, former head of BP in Alaska.
The speech, titled “Following the Yellow Brick Road,” was given at the Resource Development Council’s annual meeting in June 2002. Precision less than precise It was one of those press releases that said a lot without saying anything.
Precision Drilling, Canada’s largest oil and gas driller, announced that long-time chief financial officer Dale Tremblay had resigned and thanked him for his services.
That was it, leaving observers to speculate that Tremblay was not on board with Precision’s sale of international and technology divisions to Weatherford International and its decision to become an income trust.
Tremblay, who joined Precision in 1988, wasn’t saying anything beyond his intention to take a long vacation before exploring other opportunities.
Precision chief executive officer Hank Swartout said even less.
But Swartout, the founder of Precision, scattered plenty of hints June 6 following the US$2.28 billion sale to Houston-based Weatherford.
Asked about the likelihood of Precision converting to a trust, he said that “option is much more available now than it once was,” and “anybody with common sense would assume that’s the route,” and “the board has been looking seriously at it for the past four or five months.”
If Precision does make the switch, other oilfield service companies are expected to follow the lead, despite the roller-coaster nature of their business that raises questions about their ability to make consistent monthly cash distributions that are a key part of the trust sector.
But David Hyman, an analyst with Raymond James, said the trust pendulum is swinging towards service companies, who have enough cash to both grow and distribute and stand to make even more cash as exploration and production methods become more expensive.
If the trust conversion takes place, Precision executives are free to cash in stock options, causing analysts to puzzle over why Tremblay would leave ahead of the switch. Agrium task force to deliver recommendations Gov. Frank Murkowski’s office will likely have will have a few new arrows in its quiver next week for the battle to keep Agrium’s Nikiski nitrogen fertilizer plant in business beyond the currently scheduled Nov. 1 shutdown date.
Barring unforeseen complications, the Governor’s Agrium Task Force will finalize its recommendations to the governor early in week of June 27, according to Bill Popp, task force co-chair. The recommendations will be available to the public as early as June 30.
Nothing is cast in stone at this point, but Popp told Petroleum New June 21 that several major items are on the short list for inclusion in the document.
The first item is an employee assistance package to help displaced Agrium employees in the event the shutdown takes place as scheduled.
Another section of the report will outline recommended state action that could lead to greater oil and gas exploration in Cook Inlet.
Popp said the current draft also contains recommendations to help resolve problems of gas pipeline access in Cook Inlet.
“Hopefully we can bring some order to the hodgepodge of ownership and access that currently exists in Cook Inlet,” Popp said.
The task force will also address the need to bring additional industry to Cook Inlet, to increase demand for natural gas in the area. The task force has found that additional gas demand would create additional stimulus to build a spur line to bring North Slope gas to Cook Inlet area consumers.
At its June 20 meeting, the task force heard testimony from Bob Swenson and Will Nebesky of the state Division of Oil & Gas. Swenson addressed gas field operations impacts, including recovery issues that would arise if Cook Inlet gas production were cut back because of an Agrium plant shutdown. Nebesky presented information on Unocal’s application to store gas at Pretty Creek.
Oil Patch Insider was compiled by Kay Cashman, Gary Park and Steve Sutherlin this week. If you have a news tip for Insider, please send to [email protected] or call Cashman at 907 770-3505.
| 