Cross-border relations - vital for Alberta's entire energy sector - play a major role in ensuring the oilsands in the province's northeast can be fully developed, but more could be done to forge closer ties, say industry and government officials.

Rex Tillerson, ExxonMobil president and the man who will soon become CEO of the world's largest private energy firm, told a Canadian American Business Council forum in Calgary last week that co-operation between Canada and the United States will help meet world demand for fossil fuels, which will continue to dominate the energy sector for decades to come.

Developing the oilsands, as well as Arctic gas reserves in the Mackenzie Delta, will ensure Canada's place as an energy powerhouse in the future, he said. But these remain an "enormous technical challenge" that can be cracked, in part, through "ever stronger U.S. and Canadian commercial ties."

He said while "some contend the world supply of oil is peaking," such predictions have "always been proven wrong by an industry that has continuously pushed the limits of finding and developing new resources, including right here in Alberta."

Dave Olecko, Business Edge
ExxonMobil's Rex Tillerson spoke at business council forum.

Greg Melchin, Alberta energy minister, told forum delegates that technology developed with the help of U.S.-based companies has already played a huge role in growing recoverable reserves from the tarsands to 175 billion barrels.

"And we've only just touched 10 per cent of the (estimated) resource" of 1.7 trillion barrels, Melchin said, adding that further technological advances will allow the province to exploit the bitumen deposits.

This, in turn, has helped to establish a favourable environment for investment in the oilsands, from what was believed a decade ago would result in $25 million of capital spending over 25 years to more than $100 billion in that time, Melchin said.

The alliance between Syncrude Canada Ltd., Edmonton's Finning Canada and U.S.-based Caterpillar Global Mining, a division of Caterpillar Inc., showcases the importance of Alberta-American co-operation, Melchin noted.

Caterpillar manufactures the massive trucks that haul hundreds of tonnes of bitumen-soaked sand per load. Recently, working in conjunction with Syncrude, Caterpillar increased the carrying capacity of the massive 797 B, which is 17 metres long and stands eight metres high.

"Working with Syncrude, we have managed to increase the payload capacity of the 797 B and largely as a result of this work, the newest version of this truck will have a payload capability of 400 tonnes" from 350 tonnes, said Chris Curfman, president of Caterpillar's mining arm.

"That allows (Syncrude) to improve productivity with fewer passes required to move more material. Less fuel is consumed, further lowering costs and helping to decrease emissions as well."

Ian Reid, president of Finning Canada, which sells and services Caterpillar equipment, said even more innovation is on the horizon. "We believe our largest gains are still to be made, and we're just really starting to implement some of the newest technologies that will allow us to move forward with even greater leaps."

For their collaborative efforts, the CABC honoured Syncrude, Caterpillar and Finning with the 2005 Merit Partnership award.

Syncrude president and COO Jim Carter credited the alliance for helping the company realize its current expansion that will add 110,000 barrels per day (b/d) to take production to about 350,000 b/d next year.

He said looking ahead, the company's long-term goal will be to grow average daily output to 500,000 b/d, although it's in no hurry.

"Our next growth prospects will come after we see how all of this money that's been invested performs because we've added so much plant and equipment since 1997 that we really need to see how it's all going to go," Carter said. "In the course of doing that, we're identifying the spots where we can add capital and get a really good return."

Melchin said collaboration between Canada and the U.S. could extend to developing oilsands and oil shale south of the border, which in turn could benefit the industries in both countries. Oil shale is found largely in Colorado, while oilsands deposits are buried in Utah and Wyoming.

"We know we're substantially ahead and we have an easier chance of developing the oilsands than those (oil) shales, but we do concur that the sharing of technologies, the partnershipping of ideas, and even co-operatively working together will help all of us," he said.

"We can gain substantially by improving the development of the oilsands by learning about oil shales ... Our message to the United States and to government officials is we ought to be more strategic in developing that."

Melchin also cautioned U.S. politicians to be careful about intervening in the energy marketplace. He cited talk about establishing a floor price to protect shippers of gas on the proposed Alaska Pipeline, as well as the idea of locating new refining capacity on U.S. military bases - both of which could affect Alberta's own energy sector.

"We ought to be thinking a little bit more about how we integrate energy policy and that we're not harming each other, that we work more co-operatively together on that. I think there's a lot we could do to benefit each other."

Meanwhile, Premier Ralph Klein, who also addressed the CABC gathering, warned Ottawa to drop the "sabre rattling" and stop threatening to use Alberta's oil and gas resources as ammunition in trade retaliations against Uncle Sam over the softwood lumber dispute.

"There's no way we're going to find a replacement market for 90 per cent of our exports, nor should we try to do so just because there's a disagreement in one sector," he said.

"I believe the market and not political considerations should determine where and with whom we trade."

(John Ludwick can be reached at ludwick@businessedge.ca)