Sunday, December 02, 2012

Susan Rice's energy holdings a potential conflict of interest

Rice, looking conflicted.
Picture stolen from
Susan Rice, the US ambassador to the UN and a candidate to replace Hillary Clinton as the next secretary of state, may have some financial issues to sort out if that becomes the case.

Basically, it's because she and her husband hold $300 to $600 thousand in TransCanada stocks. TransCanada is of course the company that wants to build the Keystone XL Pipeline to carry oilsands crude to the gulf coast. She also apparently holds $1.25 to $1.5 million in Imperial Oil stocks, as well as shares in Suncor, Cenovus and CNRL, all of which would probably benefit from approval of the pipeline.

Athabasca Oil Corp. Sanctions Hangingstone Project

Athabasca's properties. Note Grossmont is carbonate,
which means it may not be developed for a long time.
Athabasca Oil Corp. (AOC) announced it had internally sanctioned the first 12,000 barrel per day phase of its Hangingstone project. It had received government approval for the phase on October 3rd. First steam is expected in late 2014, and first production in early 2015.

Although the deal is not final, it will apparently proceed as a 50/50 venture with Kuwait Petroleum, as hinted at in September. AOC estimates it will cost $536 million.

Wednesday, November 14, 2012

Husky's Sunrise on track

The Sunrise central plant. Stolen from the Husky website.
Here's an article in the Edmonton Journal from a couple weeks ago. It talks about Husky's Sunrise SAGD project 60km North East of Fort McMurray.

The $2.5 billion project is apparently on track and on budget. It's intended to produce 60,000 barrels a day, and it's a 50-50 joint venture with BP. Sounds like Husky, and maybe other operators, are getting a better grip on costs and schedules, which both experienced major overruns in various projects not so long ago.

Saturday, November 03, 2012

TransCanada and PetroChina plan Grand Rapids pipeline from Fort Mac to Edmonton

This child, who may be Asian but also
may be Mexican, is  clearly hatching
an evil plan. PetroChina is definitely
 Asian and may or may not be hatching
a similarly dastardly scheme with this
TransCanada and Phoenix Energy Holdings (a unit of PetroChina) plan to build the "Grand Rapids Pipeline",  a 500 km (300 mi) pipeline from Fort McMurray to Edmonton. It would carry 900,000 barrels per day of crude (!!) and 330,000 barrels per day of diluent. It would cost $3 billion and come online by 2017.

Wednesday, October 31, 2012

Companies buying up cheap gas, not expensive oil sands

Bloomberg has an article about how foreign investors are buying up Canadian gas projects recently, rather than oil sands projects. It notes three of the five biggest energy acquisitions this year have been gas deals, adding to $9.8 billion. The latest example is for ExxonMobil's $2.9 billion acquisition of Celtic Exploration, a gas producer in the Montney and Duvernay.

The apparent reason for this turnaround? LNG plants scheduled to start coming on over the next few years. Gas remains cheap, and bitumen remains expensive. Read on!

Wednesday, October 24, 2012

New Alberta government oil sands monitor

Alberta environmental minister Diana McQueen.
Picture stolen from the Edmonton Journal.

A number of big news outlets have reported on the new provincial body to monitor the environmental impact of oil sands. The body is tentatively called the Alberta Environment Management Agency and will be jointly funded by industry and government. It will be headed by Howard Tennant, a former University of Lethbridge president who headed a report that ultimately led to the agency's creation, and report to the environmental minister, Diana McQueen. Despite his protestations in that link, Mr Tennant is a scientist but teaches classes in management, to generally positive reviews.

Wednesday, October 10, 2012

Waterloo studies find little long-distance environmental impact from oil sands development

The study area from one of the papers.
As the elevator told me this morning, two studies from the University of Waterloo have reported little water and air pollution downwind/stream from the oil sands. In this study they found no increased levels of "airborne metals" (like tiny microscopic airplanes, I assume) in the Peace-Athabasca Delta 200 km north, and in this paper they found that according to lake-bed cores various heavy metal contaminants had decreased since the onset of oilsands development.

The study was funded by Suncor, and was of course disputed by other scientists and environmentalists, the line between the two being pretty blurry in some cases. Peter Lee and Kevin Timoney, of Global Forest Watch Canada, said the data was too limited and the study area too small. Presumably they believe their more holistic and somewhat alarming paper on the subject is a better view on the matter.

Tuesday, October 09, 2012

Cornell students making oil sands toxin sensor

Picture of the floating biosensor, stolen from the
Cornell University Genetically Engineered Machines is a group of students from the New York university working on a sensor that detects things like napthalene and arsenic, funded by the Oil Sands Leadership Initiative. I didn't know arsenic was a concern for the industry, but on further investigation, at least some people think it is.

Anyway, the actual sensor seems pretty neat. It uses a genetically modifed bacteria (S. oneidensis MR-1) that produces an electrical current when their "metal reduction pathway" is activated, as it is in the presence of napthalene or arsenic. It's supposedly better than other "biosensors" because the results isn't through fluorescence which is difficult to read continuously and autonomously. Or something, I'm probably botching the description, so read the article if you're into accuracy.

Wednesday, October 03, 2012

Cenovus buys Oilsands Quest assets

Map showing Oilsands Quest's assets.
Picture ruthlessly taken from their website.
The story of Oilsands Quest is a sad one. The plan was simple - extract a bunch of oil from a huge oil sands deposit along the Alberta-Saskatchewan border. Unfortunately there was no cap rock to contain steam, so SAGD was out, and they couldn't find any workable alternative. Fast-forward a few years and here we are: Oilsands Quest's assets have been liquidated, and what's left of them are being scooped up by Cenovus for $10 million.

Baytex buying oil sands property in Cold Lake

Baytex is a medium size, Calgary based oil and gas producer. They have recently bought a Cold Lake oil sands property for $120 million. Although the seller is remaining private, everyone seems to think it's the evil Koch brothers selling as part of their oil sands divestiture I wrote about in June.

Thursday, September 27, 2012

Connacher gets approval for Great Divide expansion

Conacher assets, including Great Divide.
Connacher has received ERCB approval for its Great Divide expansion project. The plan for the SAGD project is to add 24,000 bbl/d to the current production capacity of 10,000 bbl/d.

Wednesday, September 26, 2012

Indian companies place $5 billion bid on Conoco assets. Or maybe not.

An update on this article in July, a bunch of sources are reporting that an Indian consortium has finally placed a bid on some of ConocoPhillips' assets, including Surmont, but excluding its JVs with Cenovus, Christina Lake and Foster Creek. The Indian companies in the consortium are Oil India, India Oil (just to be confusing) and Oil and Natural Gas Company Overseas (ONGC Videsh). There is disagreement over the price they offered, however, with people saying they don't think it's worth $5 billion and ONGC apparently denying it yesterday, with their chairman saying "I can categorically say that we have not made a bid yet for the $5 billion deal". That sounds pretty categorical.

Friday, September 21, 2012

Why more bitumen isn't upgraded in Alberta

A refinery in Strathcona, outside Edmonton.
From Wikipedia, so it's not even real stealing this time.

Alberta Oil Magazine has an interesting article about why it doesn't make much sense to build bitumen upgraders in Alberta, and why that's not necessarily a bad thing. To summarize, upgrading margins have been consistently thin because the light and heavy oil price differential is so small, and plants can be built on the US gulf coast for half as much, a figure I think is pretty staggering. Cost overruns are frequent and large, particularly when the industry tries to do many "mega-projects" at once because qualified labour gets rarer and more expensive.

Thursday, September 20, 2012

Keystone being built, in Arkansas!

The Keystone XL proposed route. Arkansas is to the
right of Oklahoma.
Today I learned the Keystone XL pipeline is already being built! Unfortunately, it's in Arkansas. Welspun Tubular has made about 800 km of pipe for the line in Little Rock. If it can't clear the backlog it says it will start laying off workers.  

Wednesday, September 19, 2012

American vets to work in oil sands

I know what you're thinking because I was thinking the same; how many vets do they need up in Fort McMurray? Don't they mostly just scare animals away or drown them in tailings ponds?

Turns out they mean military veterans. No numbers are given, but it looks like an American veterans job-placement service called VetJobs has talked about placing people in Alberta industries with the help of the city of Edmonton and gotten a lot of interest from veterans in return. They claim many US veterans could help fill Alberta's labour shortage for skilled workers, or at least workers willing to learn to become skilled. In the words of Ted Daywalt, president of VetJobs, there is "no language barrier, it’s not like living in the arctic circle and there are similar Conservative values in Alberta". "It’s an ideal situation for veterans!!! *<:)" [ed: punctuation and party-hat emoticon my own] This is a clear demonstration that he understands we don't speak French or live in igloos (at least some of the year), and while he may be disappointed to learn of the area's lackluster bible thumping, maybe the veterans will be more amenable to some of the local institutions' "Conservative values".

Overall, it looks like the Atlantan is serious about sending some vets up to the Mac!

Osum gets approval for Taiga project near Cold Lake

Taiga cross section stolen from the Osum website.
Osum Oil Sands Corp. (my personal favourite oil sand company name) has received authorization from the ERCB to build its Taiga project 25km north of Cold Lake. The plan is for a 35,000 barrel per day SAGD project, the first 10,000 barrel per day phase of which will supposedly startup in 2013.

Osum is a private company with a bunch of deep pocketed partners, including Warburg Pincus, Blackstone Capital Partners, Camcor Partners Inc., Kern Partners, Goldman Sachs and the Singaporean and South Korean sovereign wealth funds. Perhaps its most attractive assets are the Grossmont carbonates it owns with Laracina, which contain a massive amount of bitumen but have yet to be effectively extracted. Taiga is clastic, not carbonates, and so is a much more conventional oil sands project, to the degree that any oil sand project can be conventional. Osum also has a pretty slick website that moves and bounces and stuff.

Sunday, September 02, 2012

Kuwait Petroleum may invest $4 billion in oil sands

A map showing Athabasca's oil sands properties,
including Birch and Hangingstone.
Map from Athabasca's website.
It looks like Kuwait Petroleum, Kuwait's state owned oil company, is close to signing a deal with Athabasca Oil Corporation (formally Athabasca Oil Sands Corporation). The deal would be for a $4 billion joint venture on Athabasca's Hangingstone and Birch properties. The companies have apparently signed a letter of intent on the matter. 

This seems like a lot of money for properties with unproven production, especially since Athabasca itself seemed to think of them as second string properties after Dover and MacKay. That said, without knowing what percentage this $4 billion would buy it's hard to comment on how reasonable the deal is.

Tuesday, August 14, 2012

Imperial says Kearl emissions will be the same as North American average

Comparison of different sources of oil.
Stolen from the Globe and Mail, as I'm wont to do.

In what seems to be pretty significant throw-down (is that a thing?), Imperial predicts that the emissions from Kearl will be the same as the average for North America, and well below the amount from heavy oil sources in places like Venezuela and California, or light oil where they flare a lot of gas, like Nigeria. See chart, they predict they'll be almost 40% less than middle east heavy oil at 103.6 kg of CO2 per barrel of refined product (?).

Native businesses in the oil sands

Dave Tuccaro. Picture stolen from the Globe and Mail.
Here's an interesting article in the Globe and Mail talking about First Nation companies operating in the oil sands. They talk about how much the economic prospects of tribes in northern Alberta have improved through the oil sands industry. I learned that Dave Tuccaro is probably Canada's richest Native, having a net worth of about $125 million. He claims that Native owned companies now pull in over a billion dollars a year from oil sands activity.

Wednesday, August 08, 2012

Bird shooing research

Picture blatantly stolen from the St. Albert Gazette
Here's an article about a U of A project to study the best ways to stop birds landing on tailings ponds. This became a well known issue, of course, when a bunch of ducks landed and died on a Syncrude tailings pond in 2008.

The mines now apparently use big cannons to scare birds off when they come near the ponds. This project appears to be looking for ways to better autonomously detect the birds with radar, cameras and so on, presumably to avoid adding jobs like "bird watcher" to industry payrolls.

Tuesday, August 07, 2012

TransCanada to make its first oil sands pipeline

TransCanada has been selected to built a 90 km oil sands pipeline between the Fort Hills Mine and the Voyageur Upgrader. Fort Hills is a 60-20-20 joint venture between Suncor, Total and Teck Resources. Voyageur is a 50-50 joint venture between Total and Suncor.

The "Northern Courier" pipeline is expected to cost $660 million and carry 190,000 barrels per day. They have a "tentative target" start date of mid-2013, but it sounds like that's going to be pushed back. It's been a big few weeks for TransCanada, which also received approval for the southern portion of the Keystone XL pipeline from the US government recently. I'm surprised to learn that they do not have any operating oil sands pipelines at the moment.

John Hoeven, US Senator, to visit oil sands

US Senator and former governor of North Dakoda John Hoeven is set to visit Fort McMurray and the oil sands tomorrow, Tuesday. He's a Republican politician seen as a supporter of the oil sands and the Canadian oil industry in general.

Monday, July 30, 2012

Southern part of Keystone XL approved

Map from
The last "key approval" for the section of TransCanada's Keystone XL pipeline was received last week. The section runs from the oil hub at Cushing, Oklahoma to Nederland, Texas on the gulf coast. 

This 400 mile part of the pipeline is apparently now called "the Gulf Coast Project". It's projected to cost $2.3 billion and create 4,000 jobs, it's not clear how many of those would be permanent.  This press release has a breakdown of jobs expected to be created.

Monday, July 23, 2012

CNOOC to buy Nexen for $15 billion

In what's a pretty big surprise to me, CNOOC is in the process of buying Nexen for $15.1 billion, or at least trying to. Another article on this is hereNexen is now apparently only the 12th largest Canadian oil company, producing 213,000 BOE's per day. The offer is for $27.50 per share, a significant premium on the price of $17.06 last Friday. 

Obviously this is a huge event for the Canadian oil industry - Nexen is one of only a handful of mid-sized Canadian oil companies operating overseas. As far as oil sands go it is less important - Nexen's Long Lake project has been something of a disappointment since the get go and its 7.23% interest in Syncrude isn't particularly big. However, at 48,000 barrels per day of oil sands production, Nexen is not an insignificant player. This article illustrates how this acquisition will more than double China's oil sands production from 33,000 barrels per day to about 81,000 barrels per day, or about 5% of the total.

Thursday, July 12, 2012

Imperial plans Aspen, a SAGD project near Kearl

Imperial announced its intentions to develop a new SAGD project in the Aspen area south of Kearl. It's not going to be until beyond 2020, however, and will "probably" involve two 40,000 barrel per day phases.

Shell gets conditional approval for carbon capture scheme

The Scotford upgrader.
Picture from Natural Resources Canada. That's right,
I'm stealing pictures from the government now.
Shell has been given conditional approval from the ERCB to capture carbon dioxide from its Scotford upgrader near Edmonton. That's a first for the industry. The project is planned to cost $1.35 billion dollars and capture 1.2 million tonnes of CO2 per year. That apparently includes $745 million over 15 years from the Alberta government and $120 million from the federal clean energy fund. The rest of the cost will presumably be split between Shell and its Scotford partners - Chevron and Marathon, each with 20% stakes.

Wednesday, July 11, 2012

Liberals seek middle ground on oil sands

Rae during obligatory helicopter tour. Picture from
National Post article.
Bob Rae, the leader of the federal Liberals, has recently visited Fort McMurray and said that Canadians need to better understand how important oil sands development is to the country,  but that that development needs to be properly regulated by both federal and provincial governments.

He has also weighed in on the Highway 63 issue, saying that federal money should be available to help twin the road. 

Company shuns pipelines, ships bitumen by rail

Back in Thomas's day, oil was
transported by pipeline.
Southern Pacific, a small oil sands company, expecting to start production this year, is planning to ship its produced bitumen by rail.

Their first production, from a SAGD property called STP-McKay, is expected to begin this year with a planned first phase capacity of 12,000 barrels per day. Bitumen will be trucked from the site 45 km north of Fort McMurray to the CN rail terminal at Lynton, south of Fort McMurray. There it will be put in train cars and sent 4,500 km to Natchez, Mississippi. There it will be put on barges and sent down the Mississippi to gulf coast refineries.

Tuesday, July 10, 2012

Indian consortium to make bid on ConocoPhillips assets

ONGC, Oil India and India Oil have joined together to buy a stake in ConocoPhillips' oil sands assets. The three are state owned corporations. The assets are said to be worth $5 billion, but it's not clear they're going to be buying all of them.

The article says that six assets are involved but doesn't list them, although earlier articles said they were Surmont, Thornbury, Clyden, Saleski, Crow Lake and McMillan Lake. Only Surmont is producing, at 25,000 barrels per day according to this article and since my free Oil Sand Review membership expired I can't be bothered to check that. It says some estimates put future potential production from all six properties at 500,000 barrels per day. That sounds pretty optimistic to me.

Tuesday, June 26, 2012

Oil sands tailings technology

A Syncrude tailings pond. Photo by
the Pembina Institute.
Tailings are a big deal for oil sand mines. They take up huge amounts of space and are a massive ugly target for environmentalist critics. This Rigzone article discusses the state of affairs on the matter.

Recent Long Lake performance better than expected

The Long Lake site.
Photo from
Global Forest Watch Canada
Much  maligned Long Lake, a property operated by Nexen, has apparently had some promising performance from its latest few pads.

Wednesday, June 20, 2012

Enbridge has pipeline failure, spills 1400 barrels near Elk Point, Alberta

A map of the pipeline route
and spill location.

On Monday, Enbridge had a 1,450 barrel leak from its Athabasca Pipeline near Elk Point about 120 miles east of Edmonton.


Jason Young, Dinosaur Hunter.
Image by Syncrude via
the Calgary Herald
A story I missed over the past while, there have been some more dinosaur finds at Syncrude! :O

Thursday, June 14, 2012

Ric McIver says oil companies should pay to twin Highway 63

Ric McIver, former mayoral candidate and alderman and current MLA and Minster of Transport, says he would welcome oil sands companies chipping in to twin Highway 63 from Edmonton to Fort McMurray, sometimes referred to as the highway of death. I think it's good of McIver to remind everyone why it was such a terrific idea not to elect him as mayor.

Wednesday, June 13, 2012

SWM creates oil sands ETF

Sustainable Wealth Management, an investment company, has introduced an oil sands exchange traded fund (ETF). They appear from their website to be Canadian. The fund will hold about 18 securities and charge 50 basis points a year as management fees.

Friday, June 08, 2012

Koch brothers to divest oil sands assets, are evil

The Kochs
Koch Industries, the conglomerate owned by the shadowy billionaire libertarian Koch brothers, has put stakes in some of its oil sands assets up for sale. The properties are in Cold Lake, Mackay, Fire-bag, Muskwa, Namur and Pelican Lake. 

Thursday, June 07, 2012

Adani is third Indian company to weigh bid for ConocoPhillips assets

A private company, Adani resources, has expressed an interest in bidding on some of the oil sands assets ConocoPhillips is looking to sell. They join compatriot companies ONGC and Oil India, both of which have also been looking at the same properties recently.

Tuesday, June 05, 2012

BlackPearl applies for big Blackrod oil sands project, aren't real pirates

The logo the company should
have used but, inexplicably,
BlackPearl, a smallish Calgary heavy oil and oil sands company, has applied for an 80,000 barrels per day project in its Blackrod area. The first phase aims to produce 20,000 barrels per day and start production in around 2016 at a cost of $700 to $800 million.

ONGC might bid on ConocoPhillips assets

Hot on the heels of their compatriots, ONGC, another Indian government owned oil company, is looking to invest in the oil sands assets of ConocoPhillips (COP). This time they say they have $5 billion to spend, much more than the $100 to $200 million Oil India had suggested a week ago. 

Monday, June 04, 2012

Oil price drop's effect on the oil sands

From the article.
This Financial Post article discusses the effect of the recent drop in oil prices on oil production in Canada and oil sands production specifically. Prices have been driven by news of slowing growth in China, a weak US jobs report, economic uncertainty in Europe and an easing of tensions in the middle east (other than Syria, of course, which doesn't export much oil anyway). It claims some oil sands projects are now uneconomic.

Sunday, June 03, 2012

Oilsands Quest to be removed from NYSE

Oilsands Quest is a troubled oil sands company whose main asset straddles the Alberta-Saskatchewan border. They were aiming to become the first oil sands company operating in Saskatchewan. They've been under creditor protection for some time, however, and now are being removed from the New York Stock Exchange because they can't meet the exchange's requirements.

Thursday, May 31, 2012

Oil sands historical production

I've recently come across CAPP's fantastic collection of data. All sorts of interesting charts could be made with this but I've started with bitumen production between 1967 and 2010.

Wednesday, May 30, 2012

Cenovus Receives Approval for Narrows Lake

Yes it is true! Everyone's favourite oil sands company just had its Narrows Lake project approved. This will be both Cenovus' third operated in-situ oil sand project (behind Foster Creek & Christina Lake) and by far its smallest.

Ground work is expected to start this fall with an initial gross design capacity of 45,000 Bbl/d. First oil isn't expected until 2017. Eventually gross production capacity is expected to reach 130,000 Bbl/d as the project is ramped up over the years.

Tuesday, May 29, 2012

Mulclair changes tack on oil sands opposition

Mulclair in a suitably unflattering
Thomas Mulclair, the leader of the federal NDP, is somewhat changing his tune on the oil sands. Whereas before he criticised them on economic grounds, now he's gone back to tried and true environmental criticism.

Shell looking to sell Orion SAGD project

Facilities at Orion.
Photo by Joey Podlubny 

via the Oilsands Review   
Shell is looking to sell its Orion project. They have government approval to produce up to 20,000 barrels a day from it, but are producing only a quarter of that. This suggests to me that it's not a particularly good project, but I guess whoever ends up buying it will be more than aware of its limitations.

U.S. Oil Sands raises money to start mine in Utah

As mentioned very briefly earlier, U.S. Oil Sands is a tiny Calgary company that plans to develop an oil sands mine in Utah. They have recently raised $11 million described by Bloomberg as a stock offering and the company itself as a private placement. I suppose the two aren't mutually exclusive. 

This money will supposedly be enough to allow them to start producing in 2013, getting up to a rate of 2,000 barrels per day in the same year with potential to produce "much" more. As far as I know, this would be the first oil sands operation (mine or in-situ) operating in the US of A. Read on for further details.

Monday, May 28, 2012

Oil India looking to buy a piece of ConocoPhillips' oil sands operations

Oil India is looking to get on the oil sands train by buying part of ConocoPhillips. Details are thin, but looks like they don't want to operate, just be a joint venture partner. Unlike its Asian competitors in China, Japan, Korea and even Thailand, India has no projects in the oil sands that I'm aware of.

Saturday, May 26, 2012

Oil sand myths

There is a lot of misinformation about the oil sands. In this article I hope to clear up some of the major misconceptions I see bandied about on various websites. I'll try to be objective but keep in mind I am in the "pro development" camp. Read on after the break.

Oil sand production by country

Out of curiosity and boredom, I have investigated the claim that most oil sands oil is produced by foreign companies. I did this by getting the production by company at the Oilsands Review and then splitting them up by home country. There's a paywall, but you can sign up for a free two week trial.

Results? In the first three months of 2011, 57% of oil sands production came from Canadian companies, 30% from American companies and the remaining 13% from 7 other countries: the Netherlands, the UK, China, Japan, France, Norway and Thailand. The often criticized Chinese stake in the oil sands produced 2.2% of the total. Details after the break.

Thursday, May 24, 2012

US Congressional report on oil sands emissions

A comparison of GHG
emissions from various sources.
From the report
The US Congressional Research Service has recently released a study on the carbon emissions of oil sands imports relative to other sources.  It's basically a literature review of oil sand emission estimates done by various groups.
Final findings? Oil from the Canadian oil sands emit between 14 and 20% more CO2 than average US imports on a "wells-to-wheels" basis. As the chart to the right demonstrates, emissions from all types of crude are dominated by fuel combustion, meaning increased extraction and refinement emissions of bitumen are largely overshadowed.

Wednesday, May 23, 2012

Laricina has promising carbonate production test

Laricina reports pretty good production numbers from wells in its Saleski property. This is a pretty big deal because it's from a carbonate formation - the Grosmont. All commercial oil sands projects currently produce bitumen from sandstone, or clastic, formations. If Laricina (and its heroically named partner, Osum) can demonstrate oil sand production from carbonates is feasible, it would mean a huge amount of resources so far considered unrecoverable would be... recoverable.

Oil sands make jobs for Georgians

SNF, a French chemical company, makes a chemical to help speed up tailing pond consolidation, and they apparently make that chemical in Georgia. Thirty people are employed at the plant, and it's looking to expand to 120 or 130 in the next five years. CAPP (they're everywhere!) estimates thousands of Georgians are employed by the industry in some capacity, and that 7,700 are expected to be employed in it eventually.

Tuesday, May 22, 2012

CNRL charged for H2S release

Canadian Natural Resource Limited was charged last Friday for hydrogen sulphide (H2S) releases at its Horizon mine and upgrader. The company has paid $35,000 in fines for sulphur dioxide (SO2) emissions since December 2010. The charges it currently faces are for the release of H2S on May 28, 2010, and then not reporting that release between May 28 and June 3, 2010. I assume they did report it after that time since I don't see how the province would know to charge them otherwise.

H2S is a much more dangerous gas than SO2. I suspect they'll face a much stiffer penalty for releasing it.

CIBC expects faster oil sands growth than expected

CIBC World Markets has released a report on the expected growth of oil sands production. They believe that the CAPP estimate, which is the de facto standard, is conservative. Rather than increasing by 1.4 million barrels per day, CIBC believe it could rise to by 2 to 2.5 million barrels per day between now and 2020. That would mean  total production of between 3.4 and 4.1 million barrels per day, compared to CAPP's estimate of 3 million. The Globe and Mail points out that the producers themselves have even more optimistic forecasts in the range of a 3.5 million barrels per day increase.

Friday, May 18, 2012

Using less water not always environmentally preferable

A man drinking water, similar to
 the water used in SAGD operations.
Jacobs Consulting has released a study on the pluses and minuses of water recycling in the oil sands. Recycling can greatly reduce water use, but can also lead to more green house gas emissions, particularly when using a evaporation methods to recycle the water, which is necessary if there are high levels of dissolved solids.

Short story? Dealing with water is an environmental problem that involves trade-offs. In areas where plenty of water is available, like in northern Alberta at the moment, it may make more sense to use fresh water from rivers than salty water from aquifers because less greenhouse gases are ultimately released.

Tuesday, May 15, 2012

Study disputes EU oil sands emission numbers

The province is spreading a study done by Jacobs Consultancy Canada that finds that the EU has overestimated oil sands emissions and underestimated those from other European sources of crude.

The EU suggests oil sands emit 22% more carbon than other sources. The paper credits newer, more efficient oil sands extraction and upgrading technology allowing oil sands gasoline to be as little as 7% more carbon intensive than gasoline from other sources in Europe and 12% on average. The paper states oil sands products could emit less carbon overall than some crudes from countries that vent a lot of gas, namely Russia and Nigeria.

Apparently the report is not released to the public (yet) so the Herald article will have to do.

UPDATE: Here's another article on the subject with more discussion on the politics behind the report. It's got an interesting bit about how the Canadian environmental minister, Peter Kent, was pushing the ethical oil message along the lines of "it may be dirty oil, but at least it’s not bloody oil", while the new natural resource minister, Joe Oliver, has backed off of this, instead focusing on economic benefits from the oil sands.

Personally, I think the ethical oil argument is a pretty good one, but I understand it makes things awkward between the Canadian government and countries that produce purportedly "unethical oil" (ahem, Saudi Arabia, Nigeria, Russia, Iran and so on).

Monday, May 14, 2012

CBC article explores exporting Alberta oil through east coast

The CBC has published a story investigating the possibility of shipping Alberta's oil sands oil east, rather than west or south as conventional wisdom generally holds. It specifically discusses TransCanada Pipeline's idea of converting one of its natural gas pipelines to bitumen. The article suggests that considering the difficulties companies have faced building or expanding pipelines to the west coast (Northern Gateway, Trans Mountain) or the US (Keystone XL) it may be faster and of relatively similar cost to transport the oil for refining and export in the east.

Canadian heavy crude exports are trading for significantly less than WTI, partly because it is "bottled up" with limited pipeline access to the US gulf coast and other refineries, and virtually no pipeline access to other markets. This differential costs Canadian exporters billions of dollars a year and is given as a major reason for Canada's drive for market diversification.

Incidentally, the CBC does not disappoint with an array of staggeringly ignorant reader comments.

Friday, May 11, 2012

Environmentalists claim oil sands mainly foreign owned

ForestEthics Advocacy, a spinoff of an environmental charity, has released a report saying that 71% of all the companies in the Fort McMurray area are foreign. It doesn't say "oil companies" but it's implied, although I suppose they could be including things like Walmart and McDonald's. They also say that the oil sands only employ 118,000 people in Canada, out of a total workforce of something like 17.5 million people.

ForestEthics' claims seem to be in direct response to the federal governments "crackdown" on foreign funding of environmental activist groups being classified as charities. The reason ForestEthics Advocacy was spun off of the original group, in fact, was so that the main group could continue to be listed as a charity and the new group could conduct advocacy work.

The Canadian Association of Petroleum Producers (CAPP) disagrees with the analysis, as do I, as outlined after the break.

Seaway Pipeline reversed ahead of schedule - higher prices for Canadian oil to come?

The Seaway Pipeline, which runs between Jones Creek, south of Houston, and Cushing, Oklahoma, a major oil hub, is being reversed, and the first oil to be sent down it is being sold. It will now ship 150,000 barrels per day in the other direction, to be increased to 400,000 barrels per day with improvements. The pipeline is owned by Enbridge and Enterprise Production Partners, who have also recently suggested twinning the pipeline which could bring capacity up to 800,000 barrels per day. 

A little history on why this is happening, and why it relates to the oil sands follows.

Tuesday, May 08, 2012

MEG uses less steam by injecting mystery gas

There's a short article on the Oilsands Review (unfortunately behind a pay-wall) on an experimental new SAGD method at MEG's Christina Lake property. Basically, they inject a non-condensible gas (ie a gas that won't turn to liquid in any of the pressures and temperatures present in the steam chamber or well) in place of some of the steam. This gas holds the pressure up while the remaining steam heats the bitumen as usual. The gas is apparently recycled. MEG reports no drop in production when switching to this method from regular "all steam" SAGD. In the first quarter of 2012 the method led to a steam oil ratio (SOR) of 1.8, which is exceptional even by MEG's standard (MEG's standard is closer to 2.5 to 2.8, which is one of the lowest in the industry). Two infill wells using the method showed cumulative SORs of about 1.0 at the end of March.
The method appears to be distinct from the various solvent injection processes being tried around the province.

Monday, May 07, 2012

NDP blames oil sands for loss of manufacturing jobs

Thomas Mulclair, the new leader of the federal NDP, criticized Alberta's oil sands last week, saying they raise the value of the dollar which hurts manufacturing jobs in eastern Canada. This is quite similar to the position Ontario Premier Dalton McGuinty (unexpectedly) took during the recent Alberta election. Mulclair claims in the last 6 years "500,000 good paying manufacturing jobs" have been lost because of the oil sands. I disagree, as outlined after the break.

Company aims to mine oil sands in Utah

U.S. Oil Sands, an embryonic Calgary company, is looking to start an oil sands mine in Utah. Environmentalists to oppose.

Syncrude gets sued by the government

The joint venture partners of Syncrude, including Canadian Oil Sands, Imperial Oil, Nexen, Mocal, Murphy Oil., Suncor, Sinopec and Syncrude Canada Ltd., are being sued by the Alberta government over a $100 million royalty dispute. It apparently boils down to the change in royalty framework on January 1, 2009. After that change, as well as significantly increasing the royalty percentage, the outlet point where royalties are calculated changed. This seems to have confused some or all of the parties involved, but in any case Syncrude is withholding the money and believes it has a legal position to do so.

Thursday, May 03, 2012

Access pipeline expansion relatively smooth sailing

To continue in this vein of pipeline stories, here's one on the billion dollar expansion of MEG Energy and Devon Energy's Access Pipeline system. The "Northeast Expansion" is not expected to run into the kinds of regulatory troubles that have so far shelved Northern Gateway and Keystone XL, largely because it's internal to Alberta and follows existing right of ways. The proposed new pipeline will be 42" in diameter and is referred to as "Great Dane size", apparently because they like to measure pipelines by the size of the biggest animal you can fit in them. Don't let this metrication fool you, however. As far as I can gather the operators intend to ship blended bitumen down the pipeline, not animals,  but it's nice to know they have the option.
The existing Access Pipeline consists of a 24" blended bitumen line running from the Conklin area (home to prolific SAGD operations such as Christina Lake and Foster Creek) through Lac La Biche (near Devon's Jackfish) to Edmonton and a 17" diluent line bringing diluent the other way. The new line will follow the same, or very similar, path.
The article says the line will eventually carry more than a million barrels a day, but this information package says it will initially only carry 350,000 barrels a day.

Wednesday, May 02, 2012

Kinder Morgan plan to expand Trans Mountain Pipeline

I'm a little late posting it, but last month Kinder Morgan announced that it is interested in almost tripling the size of its Trans Mountain pipeline running from Edmonton to Vancouver. The upgrade is a larger version of its previous plan to increase from the current 300 to 600 thousands barrels per day. The new plan would increase it to 850 thousand barrels per day. The expansion is expected to cost $5 billion. The existing pipeline is currently the only way to get Alberta crude to the west coast.
From a regulatory perspective, expanding the pipeline would likely be much easier than constructing the proposed Northern Gateway pipeline, because it would use existing right of ways. The only hiccups are complaints from Vancouver about increased tanker traffic. Tankers have been operating in Vancouver for over 60 years, but the larger pipeline would of course involve more of them.
This Washington Post opinion article talks about how alternatives such as this make opposition to Keystone XL in the US self defeating - the high price of oil will make Canada get oil sands oil to market somehow, and by opposing Keystone Americans are encouraging that market to be somewhere other than the US.

Tuesday, May 01, 2012

Highway 63 to Fort McMurray claims seven more lives

Highway 63.
From Postmedia News via the
National Post
There was a terrible head on collision on Highway 63 outside Fort McMurray last Friday that killed seven people. That brings the road's total to 46 people over the past 5 years. The basic issue appears to be that there is too much traffic travelling on the two lane highway. The population exploded and both individual autos and trucks carrying loads for industry use it more heavily than was planned for. Despite this there have apparently been issues getting the funds to twin the road. 
In this article the national post interviews the area's MLA on the topic.

Syncrude and Suncor report first quarter results

The "big ole oil sand mines" released their first quarter results yesterday. Both had reduced oil sands production due to unexpected downtime. Syncrude produced at an average rate of 295,000 barrels per day over the quarter, down from 321,000 barrels per day in 2010's first quarter. Suncor produced 305,000 barrels per day from its oil sands projects (other than Syncrude, in which it is also a 12% partner), down from 322,000 last year. Suncor's overall production including non-oil sands assets was 562,200 barrels per day, down from 601,300 last year. By my calculations that means their conventional production fell by about 19,000 barrels per day. I wonder if a large part of this might have been disruptions to the company's operations in Libya as well as Syria, where it had a less significant presence.
Note that when I say "Syncrude reported", I really mean Canadian Oil Sands reported. Canadian Oil Sands are the largest partner in the joint venture that is Syncrude, having 37% of the project.

Monday, April 30, 2012

Proposed oil sands pipeline map

From the article.
"Inside Climate News" has an interesting summary of existing and planned oil sands pipelines. They claim that current export capacity is set to triple to 3.1 million barrels per day, but at first glance it looks like they might be double counting oil that travels in one pipeline and then another.

Sunday, April 29, 2012

TransAlta and friends cancel carbon capture program

The Keephills 3 plant.
Photo by Bruce Edwards for the Edmonton Journal.
Last Thursday a $1.4 billion carbon capture program by TransAlta, Capital Power and Enbridge was cancelled on the grounds of it being uneconomic. "Project Pioneer" was supposed to capture carbon from a new coal plant, Keephills 3, west of Edmonton at a rate of a million tons per year for ten years. The project had received $800 million in provincial and federal government subsidies, most of which will now presumably be paid back.

Thursday, April 26, 2012

Small companies in the oil sands

The Globe and Mail has an interesting article on small businesses operating in the oil sands. They talk about three examples, a mechanical/steam truck/vacuum truck/water truck/other things company, a bus company and a construction company. It finishes with pointers on how to be a successful small oil sands company.

MEG releases first quarter results

MEG released its first quarter results, showing their production averaged 28,500 barrels per day, a slight increase over their first quarter last year. Profits had increased 18%, to $53 million, on lower costs and higher prices. Although it doesn't say, I would think a big part of that "lower cost" part is thanks to gas being so cheap.

Wednesday, April 25, 2012

Daniel Yergin, author of "The Prize" and chairman of IHS CERA, gave a lunch talk in Calgary calling for Alberta to better educate people and institutions in the US about the importance of the oil sands as a source of energy and the improving environmental performance of the industry. He said the industry and Albertan government should do more to dispel inaccurate portrayals, such as claims that oil sands operations are much more carbon intensive (he claims they release only 5 to 15% more carbon than conventional oil sources).

Cenovus releases first quarter results

Cenovus released its first quarter results today. Overall production has increased significantly over the first quarter last year. The Foster Creek property is producing roughly the same at about 57,000 barrels per day, however the Christina Lake property has increased almost three fold from 9,000 barrels per day to 25,000 barrels per day. These are all the numbers to Cenovus before royalties, and since both of the projects are 50/50 joint ventures with ConocoPhillips, by my very intricate calculations the two properties are producing at a total rate of over 160,000 barrels per day. The projects are two of the most successful SAGD operations in the province.

In other Cenovus news, the company is still looking for a JV partner in its Telephone Lake Project. UPDATE: The Calgary Herald has a more in depth look at the search for a Telephone Lake partner. In short, Cenovus is in no rush and wants to get as good a deal as possible, which may involve waiting for a partner that is willing to overlook the harsh differentials currently faced in selling bitumen.