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.