Forty years of production have put a dent in only 2.8 per cent of Alberta's established oilsands reserves, says the Alberta Energy and Utilities Board (EUB). The board estimates reserves at 174 billion barrels in its just-released annual reserves report. The report predicts continued massive growth in the oilsands sector, where more than $100 billion worth of projects are scheduled for construction in the next decade. Earlier this month, the National Energy Board predicted oilsands production will triple in the next 10 years to three million barrels a day - a 40-per-cent jump since its last report in 2004.
The mayor and council in Fort McMurray have voted unanimously to try and put the brakes on all future oilsands development. They say nothing else should be built until something is done to improve the area's infrastructure. Specifically, they agreed to apply for intervenor status when Suncor goes to the EUB on July 5 to apply for an expansion of its operations. However, they also decided to take the same action for any future application by any other oilsands company.
Fort McMurray's council has a supporter in Alberta Federation of Labour president Gil McGowan, who told a Calgary business audience that it might be time to consider slowing the pace of oilsands development. Low royalty rates and years of under-investment in trades training have combined to create the tight labour market that so many Alberta business leaders and politicians are now complaining about, he says. Instead of bringing in foreign workers, "a better approach would be to get business and government to make commitments to ensure our apprenticeship system actually works," says McGowan, who also suggested it's time to revisit the one-per-cent royalty rate.
Stock in Husky Energy Inc. jumped on news of a significant deep-water natural gas discovery in the South China Sea. The firm reported that "the discovery could contain a potential recoverable resource of four to six trillion cu. ft. of natural gas.”
Husky Oil China Ltd., a wholly owned subsidiary of Husky Energy, has been exploring offshore China in collaboration with China National Offshore Oil Corp. since 2002.
Shell Canada Ltd. has disclosed that maintenance at the Athabasca oilsands project is taking longer than expected. The scheduled eight-week turnaround is being extended because additional work is required, Shell said, and startup now is expected to begin in late June with a return to full production by mid-July. "Shell is working closely with customers to manage the reduced synthetic crude production due to the shutdown extension," the company said. The turnaround, expected to cost $100-$125 million, is described as the largest in the history of the Canadian subsidiary of the Royal Dutch/Shell Group.
Amid soaring costs for the proposed Mackenzie Valley natural gas pipeline, Imperial Oil says it will slow down discussions with Ottawa until it has a better grasp of the project's total pricetag. Imperial senior VP Randy Broiles said Imperial, the lead company hoping to build the pipeline to take Northwest Territories gas to southern markets, expects a revised cost estimate by this fall. Broiles said the break in talks was not the same as last April, when the pipeline proponents halted operational work until Ottawa made progress on critical issues such as access agreements. The pipeline would stretch about 1,220 kilometres down the Mackenzie valley and into existing gas infrastructure in Alberta.
Devon Energy, which acquired Anderson Exploration with its Beaufort Sea licences in 2001, says it will forfeit half its vast offshore acreage in the Beaufort and pay an additional $1-million deposit to Ottawa in exchange for being able to suspend its drilling program for a year. Oklahoma City-based Devon became the first energy company in more than 15 years to drill a well in the Beaufort last winter. But the $60-million Paktoa exploration well failed to discover the massive gas reserve it was hunting for. While some significant discoveries were made in the Beaufort during the 1970s and 1980s, the gas is still stranded in the ground as the entire industry awaits the ultimate decision on a pipeline heading down the Mackenzie Valley.
Despite the uncertainty swirling around oil and gas exploration in the Beaufort Sea, Anderson Energy president Brian Dau says patience and time are required to see success in the basin. "I think you have to be patient with it - the pipelines will get built at some point.”
Dau, who controlled large exploration licences in the Canadian Arctic when he headed Anderson Exploration, also said that extreme costs in the Beaufort make it a "big boys' game. At some point it'll be onstream, and when it is onstream they'll say, 'Gee, I'm glad we made all those investments way back when.' And that's a decision you make as a big company."
Kitimat LNG Inc. has won a B.C. environmental assessment certificate for its proposed liquefied natural gas terminal near Kitimat, B.C. Kitimat LNG, a privately held Calgary company headed by former Duke Energy executive Alfred Sorensen, said the provincial certificate includes 243 commitments ranging from emission standards to protection for fish and wildlife. The $500-million project at Bish Cove, 14 kilometres south of Kitimat, is to include a terminal to receive insulated tankers. The project still requires approval by the federal Environment Ministry, along with various provincial and federal permits.
WestPac LNG Corp. has formally begun its proposal process for an LNG terminal near Prince Rupert, B.C. The WestPac proposal for Ridley Island outside Prince Rupert envisages a terminal with a capacity of 300 million cu. ft. per day, at an estimated cost of $300 million. WestPac has already signed a 30-year lease for 80 hectares on Ridley Island next to the existing grain and coal shipping terminals.
TransCanada Corp. has filed for regulatory approval to convert some of its natural gas pipeline capacity to carry oilsands crude into the U.S. Midwest as part of its proposed $2.1-billion US Keystone project. Seeking approval from the National Energy Board to transfer segments of its west-to-east mainline gas pipeline is the first of two major Canadian regulatory hurdles facing Calgary-based TransCanada before it begins building. The company plans to file for a certificate of public convenience and necessity to build new infrastructure later this year, once environmental assessment work is completed in the summer. Keystone also requires a battery of approvals at the state and local levels in the United States.
- with files from Business Edge