tag:blogger.com,1999:blog-63013815791626452492024-03-13T17:32:10.327-06:00Oil Sand BoxNews from the oil sandsADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.comBlogger92125tag:blogger.com,1999:blog-6301381579162645249.post-91317289664371323262013-08-22T09:23:00.004-06:002013-08-22T16:15:52.031-06:00Bubbling leaks at CNRL's Primrose CSS project cast shadow over company and industry<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-aMiSo2Fn4Vg/UhYs1SCX47I/AAAAAAAAHhg/SFaZOyICiio/s1600/bitumen+seep.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="145" src="http://1.bp.blogspot.com/-aMiSo2Fn4Vg/UhYs1SCX47I/AAAAAAAAHhg/SFaZOyICiio/s320/bitumen+seep.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Bitumen seep at Primrose. Picture stolen from the <a href="http://www.edmontonjournal.com/Thomson+CNRL+bitumen+leak+raises+troubling+questions/8772902/story.html">Edmonton Journal</a>.</td></tr>
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Since at least May, CNRL's Primrose Cyclic Steam Stimulation (CSS, or "Huff and Puff") project has been <a href="http://www.calgaryherald.com/business/Ewart+CNRL+confident+Primrose+leak+resolved/8767144/story.html">leaking bitumen to the surface</a> near Cold Lake and Bonnyville. In total an estimated 6,600 barrels have leaked. The company has stopped steaming that part of the reservoir (under orders from the <a href="http://www.aer.ca/">Alberta Energy Regulator</a>, or AER) and the leak rate is now reportedly under 20 barrels per day and declining daily. It could continue leaking (at lower and lower rates) for months or even years. At the moment Primrose is CNRL's only producing in-situ oil sands project, although a number of others are in various stages of development.<br />
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Unlike the Total's Joslyn incident, where a SAGD well <a href="http://www2.canada.com/edmontonjournal/news/story.html?id=7bb61e4c-4f1f-4d8e-85e6-b831761f5db9">spectacularly exploded in 2006</a>, this is a slow leak. Where the leak is coming from seems to be a pretty contentious issue. CNRL says they think it's a wellbore integrity issue, meaning it's simply a matter of drilling new wells or repairing the old ones - the bitumen can still be safely recovered. Others have suggested they may have fractured their cap rock, which would be much harder to fix, if it can be fixed at all. </div>
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I haven't seen the evidence CNRL is presenting to support its claim that it's a wellbore issue, but sitting here in my ignorance I'm leaning towards thinking it's not. Intuitively I would think that a wellbore leak would respond to shutting in more quickly than a broken top seal, and the response so far doesn't seem to be very fast. If <a href="http://www.edmontonjournal.com/technology/Primrose+bitumen+spill+grows+barrels/8723437/story.html">this article</a> is correct, the steam injection depth at Primrose is about 500 m, much deeper than was the case at Joslyn, and might explain why a similar problem (cap rock failure) could lead to a different result (slow leak versus catastrophic blowout). </div>
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What are the implications for CNRL? Well the company is apparently claiming the property will still produce an average of over 100,000 barrels per day this year but I think that's a stretch - <a href="http://www.cnrl.com/upload/media_element/628/01/q113_interim-report.pdf">their Q1 financials</a> show they produced an average of 109,000 barrels per day from the project in Q1, and I don't see how they could stay over 100,000 without steaming for half a year, but maybe there's something I don't understand. If they're unable to stop the leak I think it's unlikely the AER will let them resume steaming and in the worst case scenario I suppose the entire project could be un-salvageable. That would be a significant setback, although probably not fatal. On top of the Primrose production, in <a href="http://www.cnrl.com/upload/media_element/628/01/q113_interim-report.pdf">Q1 of this year</a> they (in a remarkable and confusing coincidence) also produced an average of 109,000 barrels of bitumen per day from their <a href="http://www.cnrl.com/operations/north-america/horizon-oil-sands.html">Horizon mine</a> and 236,500 barrels per day of conventional crude elsewhere in North America (I think that's the number, it's confusing because they don't appear to split out in-situ bitumen from conventional and heavy North American production) and a further 35,000 barrels per day elsewhere in the world, namely the North Sea and offshore West Africa (all those rates are before Royalties). They also have significant natural gas production (1,150 MMcf/d, almost all of it in North America), bringing their total oil equivalent production to 680,844 boe/day before royalties, or 612,062 after. Losing 100,000 barrels per day would obviously not be fantastic, but more troubling perhaps is that bitumen production is their only consistently growing sector, so if Primrose's problems are intractable and the new developments can't pick up the slack they could be in long term trouble. I also imagine they're liable for a bunch of fines from the province.</div>
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What are the implications for the wider industry? Well if it is a wellbore issue, the message is clearly to have better completions on wells. If it's a cap-rock issue, it may mean companies need to look at reducing the pressures they're operating at, even in relatively deep horizons. This could significantly slow down production rates. If Primrose's problem turn out to be related to the use of CSS (rather than SAGD), it could further cement SAGD as the thermal stimulation method of choice in the province.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-44944400417413768672013-08-16T11:49:00.002-06:002013-08-16T11:53:35.135-06:00The trouble with MEGALOADS<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-4SQFCaIwmcg/Ug5iW8WsVNI/AAAAAAAAHfo/3Dz1VkGdBc4/s1600/MEGALOAD.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="281" src="http://1.bp.blogspot.com/-4SQFCaIwmcg/Ug5iW8WsVNI/AAAAAAAAHfo/3Dz1VkGdBc4/s400/MEGALOAD.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">A megaload on its way to Kerl. Picture stolen from <a href="http://www.mymcmurray.com/final-kearl-project-megaloads-en-route/">mymcmurray.com</a>.</td></tr>
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Athabasca <a href="http://www.calgaryherald.com/business/Oilsands+builder+vows+continue+megaloads/8770582/story.html">says it will continue moving "megaloads"</a> through Idaho to get the facilities at its Hangingstone SAGD project up and running. Specifically they're trying to move in big evaporators which opposition groups, including the <a href="http://en.wikipedia.org/wiki/Nez_Perce_tribe">Nez Perce tribe</a>, say clog up roads and ruin scenery. Oil sands operators like using big modules because they mean less fabrication on site, which has helped make the oil sands notorious for cost overruns.</div>
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The first (of two?) shipments apparently just drove through the demonstrations along <a href="http://en.wikipedia.org/wiki/U.S._Route_12_in_Idaho">US Route 12</a> (a Federal highway from the river port at Lewiston to the Montana border at Lolo pass), delayed but not deterred. The next shipment is due to pass through next month. If the protesters manage to block them somehow, the shipper will have to find some alternative. The most likely seems to be what Imperial did when faced with the exact same problem, but for 207 loads from Korea: cut the stuff into smaller pieces and ship it up the interstate. Obviously, due to the much smaller scale of Hangingstone this is a much smaller issue<a href="http://www.oregonlive.com/business/index.ssf/2011/02/imperial_oil_will_shrink_stran.html"> than it was with Kerl</a>.</div>
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I think it's kind of ironic that these evaporators are being made in Port Coquitlam, a suburb of Vancouver, and then sent through the states, opening up a whole new can of worms on the way. I assume they aren't using the <a href="http://en.wikipedia.org/wiki/Trans_Canada_Highway">Trans-Canada</a> because it's too busy and there are too many low bridges in the way. I guess it goes to show how much more built up the road system is in the US, or maybe how much more difficult it is to make good roads in the BC Rockies. Maybe if Alberta intends to continue shipping in massive industrial modules it should talk to BC about upgrading a route through the mountains. Of course I'm sure they'd face plenty of opposition from Canadian groups as well.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-15806031267595314832013-06-02T11:16:00.003-06:002013-08-26T08:24:46.913-06:00Could oilsands crude be shipped in the Atlantic sooner than the Pacific?<div style="text-align: justify;">
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<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-gN6mnBicZNQ/Uat4_DBp3HI/AAAAAAAAHDo/Bu9lSDoBPmU/s1600/Portland-montreal+pipeline.JPG" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="192" src="http://4.bp.blogspot.com/-gN6mnBicZNQ/Uat4_DBp3HI/AAAAAAAAHDo/Bu9lSDoBPmU/s320/Portland-montreal+pipeline.JPG" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">A map of the Portland-Montreal pipeline.<br />
From the <a href="http://en.wikipedia.org/wiki/Portland%E2%80%93Montreal_Pipe_Line">surprisingly detailed Wikipedia article</a>.</td></tr>
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So what will be the first port to put oilsands crude on the water (not to be confused with <i>in </i>the water, knock on wood)? Well according to <a href="http://www.reuters.com/article/2013/05/22/oilsands-maine-idUSL2N0E317720130522">this article</a>, if the <a href="http://www.pmpl.com/">Portland-Montreal-Pipeline company</a> has anything to say about it, it might be in Portland, Maine, that bitumen finally takes to the seas. It's a bit confusing, but it appears the company is owned by Suncor, Imperial and Shell.<br />
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Presumably, this reversal will change the name to the Montreal-Portland-Pipeline company. Since <a href="http://www.mppl.com/">www.mppl.com</a> is currently occupied by a blank page, maybe that's exactly the plan. However, since that site is <a href="http://www.ip-adress.com/whois/mppl.com">registered in the British Virgin Islands</a> to an apparently defunct company called "<a href="http://cdnproperties.com/">CDN Properties</a>", maybe they haven't thought this far ahead.<br />
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The history of the pipeline <a href="http://en.wikipedia.org/wiki/Portland%E2%80%93Montreal_Pipe_Line">is pretty interesting</a>. It was originally built in World War 2 because it wasn't safe to transport oil along the Saint Lawrence due to German submarines. The pipeline has transported 4 billion barrels of oil to Montreal over its lifetime, and is the reason Portland is the biggest oil importer on the American East Coast, according to Wikipedia. According to the article the line is currently operating well under-capacity.</div>
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The buried 236 mile, 240,000 barrel per day capacity, line currently carries oil imported into Portland to refineries around Montreal. So two physical things stand in the way: the line needs to be reversed, and there's currently no way to get oilsands crude to Montreal. </div>
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The first problem appears to be the smaller one, and PMPL says they've already spent $6.5 million preparing for line reversal. The second problem is a stickier situation of two parts. Problem 2a: oil must physically get to Montreal. Enbridge wants to do that by <a href="http://www.enbridge.com/ECRAI/Line9BReversalProject.aspx">reversing its "Line 9"</a> to carry oilsands crude from Sarnia (via North Westover) to Montreal, as well as expanding it to 300,000 barrels per day. See map.<br />
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<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-Mp_lObBszx4/Uat19CTlEFI/AAAAAAAAHDc/c1xzlYN8Q6M/s1600/Enbridge+Line+9.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="200" src="http://1.bp.blogspot.com/-Mp_lObBszx4/Uat19CTlEFI/AAAAAAAAHDc/c1xzlYN8Q6M/s320/Enbridge+Line+9.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Enbridge's Line 9. From the Enbridge site on the pipeline.</td></tr>
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Problem 2b is that as of the last survey <a href="http://www.cbc.ca/news/pdf/oil-sands-factum.pdf">Quebec is the most hostile province in Canada when it comes to the oilsands</a>. That is particularly the case for pipelines crossing Quebec. <a href="http://business.financialpost.com/2013/04/26/enbridge-line9-sarnia-montreal/?__lsa=1cba-dc01">Here is an article</a> describing the trust issues Enbridge has in Quebec.<br />
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So which coast do I think will see bitumen first? Had this been a few weeks ago when the NDP was looking to win the provincial election in BC, I'd have said the Atlantic, if not through Portland then through somewhere else. But now that the Liberals have been re-elected in BC and are <a href="http://business.financialpost.com/2013/05/24/enbridge-to-meet-re-elected-b-c-liberals-on-northern-gateway/?__lsa=1cba-dc01">making somewhat friendlier noises about pipelines</a>, it's not so clear. First Nation opposition and land-claims may sink pipelines like Northern Gateway; I'd say it's currently a toss up. Or I suppose it could never get to either coast, and we'll be locked into exporting solely to the US forever.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-74473640192769022012013-05-23T17:29:00.001-06:002013-05-23T17:33:44.706-06:00CNRL's Horizon expansion under budget (so far)<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-_tENdy6rkr8/UZ6l_R7FLkI/AAAAAAAAHDM/npbAfRb5v04/s1600/mining-2.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="125" src="http://4.bp.blogspot.com/-_tENdy6rkr8/UZ6l_R7FLkI/AAAAAAAAHDM/npbAfRb5v04/s400/mining-2.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">The Horizon mine today, picture stolen from CNRL homepage.</td></tr>
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<a href="http://business.financialpost.com/2013/05/03/horizon-oil-sands-expansion-under-budget-so-far/?__lsa=cfd1-b67d">Here's an article</a> about the progress on <a href="http://www.cnrl.com/">CNRL</a>'s <a href="http://www.cnrl.com/operations/north-america/horizon-oil-sands.html">Horizon</a> mine expansion. On the upgrade from 110,000 to 250,000 barrels per day, they say they're now 20% done and 10% under budget. Doesn't say if the expansion is on schedule (although CNRL's <a href="http://www.cnrl.com/operations/north-america/north-american-crude-oil-and-ngls/thermal-insitu-oilsands/kirby.html">Kirby SAGD</a> project <a href="http://news.ca.msn.com/money/cnrl-oilsands-project-ahead-of-schedule">is apparently ahead of schedule</a>). Ultimately they say they're going to increase the mine size to 500,000 barrels per day, although don't provide a timeline or anything on how they intend to do so, as far as I can see.</div>
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Will they stay under budget? Possibly, the labour market is apparently a lot looser than it was when they made Horizon Phase 1. That project that cost about $10 billion after being initially estimated at cost $7 billion. Horizon has only had one quarter running at its intended capacity of 110,000 barrels per day - the first three months of this year. Not sure if that means Phase 1 was behind schedule as well as over budget. (As a side note, the project is unfortunately not expecting to run at capacity in the next two quarters thanks to planned maintenance. Instead they're expected to produce 77 and 83 thousand barrels per day respectively).</div>
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<a href="http://www.northernminer.com/news/canadian-natural-on-track-with-horizon-expansion/1002326186/">This article</a> has a few other details. The expansions (called Phase 2 and Phase 3) are expected to be completed in 2017. Although it also doesn't have a total cost for the expansions, the company has previously stated it is aiming for a cost of <a href="http://m.theglobeandmail.com/report-on-business/canadian-natural-to-set-own-pace-on-horizon-expansion/article1822288/?service=mobile">$90,000 and $110,000 per barrel per day production</a>, which for 140,000 barrels per day means $12.6 to $15.4 billion. That's pretty confusing since they say they want to control costs better than they did in Phase 1, which cost $88,000 per barrel per day and I would have thought an expansion would be cheaper than the original development. Maybe inflation is having a big impact on their estimates, but it makes me wonder if maybe they're only under budget because they have a very conservative set of cost estimates? Integrated mining efficiency is given as $130,000 per barrel per day in <a href="http://www.sunshineoilsands.com/uploads/files/macquarie_report_01_10.pdf">this interesting Macquarie report</a>, so maybe they're not being that pessimistic. Costs in 2013 on Horizon are expected to be $2 billion or so, and the CNRL website says they spent $2 billion on the project in 2012. <a href="http://www.albertametal.ca/index.php/publications/alberta-metal-articles/64-cnrl-takes-steps-to-reduce-cost-risk-on-expansion-of-its-horizon-project">This website</a> says they expected to spend $0.8 to $1.2 billion on expansions in 2011. Unless there was significant capital spent before 2011, that means they have a whole lot of capital left to spend unless they're way under budget. That makes me doubt the 2017 completion date they claim. That site also says they've split the Phase 2 and 3 expansions into 43 separate projects (meaning Phase 2 and Phase 3 projects overlap), thinking that will keep costs under control better, or perhaps more accurately will allow them to abandon a project if it is going way over budget. I guess we'll see if that strategy works out for them, I know they've succeeded in confusing me.</div>
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Of course if the current pipeline capacity crunch isn't sorted out by the time this mine ramps up, it will add to Canada's "oil glut" problem which is driving down prices. Of course those lower prices are part of the reason labour is cheaper in Alberta now, which is why Horizon is under budget at the moment, so it would seem to be an intricate collection of double-edged swords.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-9452364524307352372013-05-14T13:21:00.002-06:002013-05-14T13:21:27.879-06:00Algae to reduce oilsands emissions?<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-_aIsTR_TclU/UZKOi7XnJoI/AAAAAAAAHC8/hidU9Ucmvw4/s1600/Bioreactors.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="245" src="http://4.bp.blogspot.com/-_aIsTR_TclU/UZKOi7XnJoI/AAAAAAAAHC8/hidU9Ucmvw4/s320/Bioreactors.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Some bioreactors. Picture stolen from the Pond Biofuels<br />homepage.</td></tr>
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<a href="http://blogs.wsj.com/canadarealtime/2013/05/10/could-algae-give-canadas-oil-sands-an-image-makeover/?mod=google_news_blog">Here</a>'s an interesting article about a pilot plant being made by <a href="http://www.cnrl.com/">CNRL</a> and <a href="http://www.pondbiofuels.com/">Pond Biofuels</a>. Basically it appears they want to use CO2 produced in oilsands facilities to grow algae, which can then be used as animal feed, biofuel or fertilizer. The $19 million facility will be built at CNRL's <a href="http://www.cnrl.com/operations/north-america/north-american-crude-oil-and-ngls/thermal-insitu-oilsands/primrose-and-wolf-lake.html">Primrose South site</a> near <a href="https://maps.google.ca/maps?q=bonnyville+alberta&hl=en&ll=53.897865,-109.346924&spn=5.057193,13.529663&hnear=Bonnyville,+Division+No.+12,+Alberta&gl=ca&t=h&z=8">Bonnyville</a>. </div>
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Clearly early days on this, but might turn out to be something important.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com3tag:blogger.com,1999:blog-6301381579162645249.post-7728467664595787922013-03-27T10:46:00.001-06:002013-03-27T10:48:39.675-06:00Sinking bitumen to cause big trouble for Pacific exports?<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-77usiUAq8BI/UVMe0ABlueI/AAAAAAAAGR0/WdHDfYv1fIw/s1600/Sinking+bitumen.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="133" src="http://1.bp.blogspot.com/-77usiUAq8BI/UVMe0ABlueI/AAAAAAAAGR0/WdHDfYv1fIw/s320/Sinking+bitumen.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">A guy talking near some jars of bitumen.<br />
Stolen from <a href="http://www.huffingtonpost.ca/2012/08/26/enbridge-cleanup-plans-gateway-bitumen_n_1830949.html">here</a>.</td></tr>
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<a href="http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/buoyancy-of-oil-sands-bitumen-raises-spill-concerns/article10033867/">Here</a>'s an article about how some scientists think that some diluted bitumen would sink in the event of an oil spill in the ocean. </div>
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Merv Fingas says that Enbridge's expert, Alan Maki, is wrong when he says diluted bitumen is wrong. Fingas says the diluent separates from the bitumen in time, and then any bitumen that is denser than salt water will sink in the ocean, making cleanup more difficult. Quite a lot of bitumen is denser than salt water, although not all. He adds that bitumen is less damaging to sea life than conventional oil because it has "fewer soluble toxins". I suppose that squares with the observation that fish in the Athabasca river appear to be fine despite exposure to bitumen for thousands (millions?) of years.</div>
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So is he right? The article goes into a bunch of contradictory studies. Suffice to say, I think there's a good chance bitumen sinks more than conventional oil, but I really don't see why it's so hard to prove that conclusively. Why doesn't the <a href="http://www.nrc-cnrc.gc.ca/eng/">NRC</a> or someone go and do a test and put an end to this he-said she-said? </div>
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This is somewhat topical for Enbridge, since they've recently been ordered to dredge parts of the Kalamazoo river, where a heavy oil spill took place last year. They explain that by saying the oil coated sediments which dragged it down, something that could presumably happen in the ocean with diluted bitumen. </div>
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Solutions if Fingas is right? Well I guess they could upgrade any bitumen before shipping it. Or continue shipping exclusively to the US. Or maybe ship it really, really carefully?</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-27616667514231009842013-03-27T10:03:00.000-06:002013-03-27T10:15:20.426-06:00Enbridge to transport crude from AOC's Hangingstone project<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-eSB4dCtJfL8/UVMXojQSFeI/AAAAAAAAGQs/TcdVfr12MKM/s1600/Hangingstone+Project+-+AOC.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="222" src="http://3.bp.blogspot.com/-eSB4dCtJfL8/UVMXojQSFeI/AAAAAAAAGQs/TcdVfr12MKM/s320/Hangingstone+Project+-+AOC.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Hangingstone project map. Ruthlessly stolen from the<br />
Athabasca homepage. Note the prosimity to Ft. Mac.</td></tr>
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<a href="http://www.enbridge.com/">Enbridge</a>, an Alberta pipeline company, has made an agreement with <a href="http://www.atha.com/">Athabasca Oil Corp</a> (AOC) to <a href="http://www.huffingtonpost.ca/2013/03/21/enbridge-athabasca-hangingstone-oilsands-project_n_2925229.html">transport crude from AOC's Hangingstone project</a>. They say this will cost Enbridge $200 million, apparently for running a 50 kilometre line from Hangingstone to its <a href="https://maps.google.com/maps?q=cheecham+alberta&hl=en&ll=56.472353,-111.177521&spn=1.184839,3.382416&sll=37.0625,-95.677068&sspn=100.447394,216.474609&t=h&hnear=Cheecham,+Division+No.+16,+Alberta,+Canada&z=10">Cheecham</a> terminal and expanding the facility there as required. They say Enbridge already connects 8 oilsands projects to terminals.</div>
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There is a bit of a mismatch between this article and <a href="http://www.atha.com/operations/thermal-oil/hangingstone.html">AOC's Hangingstone page</a>. The article says the first phase of Hangingstone is supposed to start production at 16,000 barrels per day, but the company page says it only has approval for a 12,000 barrel per day development. It's possible the difference is made up with diluent of some kind since I don't think they're upgrading the bitumen on site, but that seems like quite a big difference. Maybe they think they'll be able to increase the provincial approval amount if necessary. The pipeline is expected to be running by the second half of 2015, while Hangingstone Phase 1 is forecast to start production in Q4 of 2014. No indication of how Hangingstone will transport its oil in that 6 month gap, <a href="http://michaelhardcastle.com/sagd-activity/2013/3/23/trucking-facilites-added-to-hangingstone-cpf">perhaps trucks</a> (note that site didn't work when I tried, <a href="http://webcache.googleusercontent.com/search?q=cache:http://michaelhardcastle.com/sagd-activity/2013/3/23/trucking-facilites-added-to-hangingstone-cpf">here's</a> the cached version)? Or perhaps the Q4 2014 date is just for public consumption and the company is internally estimating 2015?</div>
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The article also says a second phase is to follow at 60,000 per day, but the company page says there are two more phases at 35,000 each. These are forecast to start in 2017 and 2018 but aren't applied for yet so who really knows?</div>
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I think Hangingstone is a pretty good property. Its main geological problem appears to be its relatively shallow depth, which means the steam chambers have to operate at lower pressures than other SAGD operations use. I assume AOC have ideas on how to get around that, however. Hangingstone is completely owned by AOC. Having a development owned by one relatively small company is unusual in the oilsands - usually these projects are either undertaken by a giant like Suncor or a JVs with a giant, like Cenovus and Conoco. Indeed, AOC has apparently been <a href="http://www.oilsandbox.com/2012/09/kuwait-petroleum-may-invest-4-billion.html">looking for a partner in Hangingstone and Birch</a>. Because they're going ahead with this despite not having a sugar mama, I think Hangingstone is a very big deal for the company - it could make or break them, so presumably they're pretty confident it's going to work. AOC reportedly spent $478 million on oil sands projects in 2012, a number that's likely to balloon as things get moving in Hangingstone and elsewhere.<br />
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The public may not be as confident - the company's stock has been trading at its <a href="http://www.calgaryherald.com/business/Third+party+outages+Athabasca+output/8133139/story.html">lowest point ever over the last month</a>, although a lot of that seems to be to do with problems with its light oil projects - specifically pipeline capacity problems. But that's a story for another day.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-59798289131507542262013-03-22T15:36:00.001-06:002013-03-26T17:21:04.529-06:00Suncor likely to pull the plug on Voyageur<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-ZWddkY51Pz8/UUzMbzm_ttI/AAAAAAAAGH8/ZjASydyXkkY/s1600/Voyageur+aerial+photo.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="266" src="http://4.bp.blogspot.com/-ZWddkY51Pz8/UUzMbzm_ttI/AAAAAAAAGH8/ZjASydyXkkY/s400/Voyageur+aerial+photo.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">This is what $3.5 billion buys you these days.</td></tr>
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After <a href="http://www.suncor.com/default.aspx">Suncor</a>'s CFO Bart Demosky spoke pretty critically of the project last week, the Voyageur upgrader is looking like it's going to be shelved. This is a big project - $11.6 billion according to the article, taking in <a href="http://www.total-ep-canada.com/upgrader/upgrader.asp">269,000 barrels of bitumen and outputting 218,000 barrels of synthetic crude</a> each day. I'm not really sure how a project that big just gets "cancelled" like some TV show - the article says Suncor has already spent $3.5 billion on the site (it's not clear if that includes the money spent by their 50/50 JV partner, Total). I probably shouldn't use words like "cancelled", since the final decision on the project won't be made until later this month.</div>
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The pessimism is apparently caused by <a href="http://www.calgaryherald.com/business/Voyageur+upgrader+economics+worsen+Suncor/7927158/story.html">increasingly crappy economics</a>. The big glut of shale oil in the US has increased the supply of light, sweet crude similar to what comes out of bitumen upgraders. As a result, the price of synthetic crude has dropped, and there's less profit to be made turning a barrel of bitumen into it. At the same time, labour and equipment costs in Alberta are sky high. Suncor took a $1.5 billion writedown on the upgrader last year, apparently the reason it lost $562 million in Q4 2012.</div>
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This is the classic problem with upgrading bitumen - it employs quite a lot of people, but it's a margin game with slim profits for companies. As a result, politicians, <a href="http://www.oilsandbox.com/2013/03/ndp-about-face-on-oilsands.html">particularly those on the labour-left</a>, love the idea but companies would rather spend their capital on things with better returns, particularly if they have a big list of better options, which companies like Suncor do in their upstream operations. For $11 billion, Suncor could probably produce hundreds of thousands of barrels more bitumen per day. From that perspective, ditching Voyageur makes a lot of sense.</div>
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<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-bwxRb7DlduE/UUzOThkM5BI/AAAAAAAAGIE/xD77OnqDbTQ/s1600/Voyageur+location.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://2.bp.blogspot.com/-bwxRb7DlduE/UUzOThkM5BI/AAAAAAAAGIE/xD77OnqDbTQ/s320/Voyageur+location.jpg" width="291" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Location map of the project. Taken from the Total<br />
site, sorry I don't know what they mean by<br />
red areas "not included in agreement" or why<br />
they labelled the NWT as "Canada".</td></tr>
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Irving Oil has an interesting take on this - build <a href="http://business.financialpost.com/2013/03/21/new-oil-sands-upgraders-belong-on-coasts-irving-president/?__lsa=dadb-5516">upgraders in Newfoundland</a> where labour's cheap and (presumably) there aren't nearly as many more attractive options for the capital (he actually says "the coasts" but I'm sure they're aware of the political problems getting a bitumen pipeline across the Rockies). Then Albertans could focus on increasing production, where our expensive workforce is more justified. That article also points out that it might make more economic sense to add coker units to existing refineries in the US, rather than building standalone upgraders in Canada.</div>
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Voyageur (or what's finished of it so far) is located north of Fort McMurray. It was intended to upgrade bitumen from the Joslyn and Fort Hills sites, both of which are JVs between Suncor and Total, as well as any other takers in the region. It's not clear what these projects will do with their bitumen if they can't upgrade it at Voyageur.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-72835194850443358742013-03-22T09:06:00.003-06:002013-03-31T09:24:49.227-06:00Cenovus expansion plans<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-GCt3zn4vavg/UUxuhM6Q9bI/AAAAAAAAGHs/TsMfXDz8kPg/s1600/Cenovus+plans.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="245" src="http://1.bp.blogspot.com/-GCt3zn4vavg/UUxuhM6Q9bI/AAAAAAAAGHs/TsMfXDz8kPg/s320/Cenovus+plans.jpg" width="320" /></a></div>
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Here's a table showing planned expansions and new developments by Cenovus. If they all come about (and no other companies grow by similar amounts) I think it would <a href="http://www.oilsandsdevelopers.ca/wp-content/uploads/2012/09/Oil-Sands-Project-List-September-2012.pdf">easily make Cenovus the biggest oilsands producer</a> (mining or in-situ) at over 500,000 barrels per day.</div>
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Note that the biggest currently operating in-situ project is Foster Creek at about 120,000 barrels per day, closely followed by Imperial's Cold Lake project at about 110,000. These expansions, taking both Christina Lake and Foster Creek above 300,000, would be breaking new ground in terms of project scale.</div>
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My gut feeling is that the expansions are ambitious, but believable. Similarly, Narrows Lake <a href="http://www.cenovus.com/news/news-releases/2012/0530-narrows-lake-approval.html">sounds pretty promising</a>. I'm not quite as sure they're ever going to be getting 180,000 barrels per day out of <a href="http://www.cenovus.com/operations/docs/grand-rapids-pld.pdf">Grand Rapids/Pelican Lake</a> though. I also can't really picture 90,000 out of <a href="http://www.cenovus.com/operations/oil/telephone-lake.html">Telephone Lake</a> when as far as I know they're still <a href="http://www.reuters.com/article/2012/04/25/cenovus-telephone-lake-idUSL2E8FP7VW20120425">struggling to find a partner for the project</a>, and the if it was such a promising prospect someone would have jumped in by now. Hopefully time proves me wrong! I think it would be great to have an undisputed Canadian leader in the oil sands.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-15434875187832071552013-03-11T11:21:00.000-06:002013-04-25T14:05:07.020-06:00Chavez dead, bad news for the oilsands?<div style="text-align: justify;">
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<a href="http://2.bp.blogspot.com/-08v-wrQdesQ/UT4WoLB3dSI/AAAAAAAAGDs/_DhCnf-Itvo/s1600/Chavez+Canada+impact.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://2.bp.blogspot.com/-08v-wrQdesQ/UT4WoLB3dSI/AAAAAAAAGDs/_DhCnf-Itvo/s320/Chavez+Canada+impact.jpg" width="196" /></a></div>
Well in case you missed it, Hugo Chavez died last week. A lot of people are happy to see him go, but maybe Canada's oil industry shouldn't be among them. Under his term as president (1999 - 2013) Venezuela's oil production <a href="http://www.wolframalpha.com/input/?t=crmtb01&f=ob&i=venezuela%20oil%20production">fell from about 3.5 million barrels per day to about 2.5 million barrels per day</a>. This neglect was one of the reasons Canada's oilsands industry grew so quickly over the same period: US imports from Venezuela fell from a height of <a href="http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUSVE2&f=A">1.4 million bbl/d in 1997 to 868 thousand bbl/d in 2011</a>. Canadian exports to the US <a href="http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUSCA2&f=A">grew from 1.2 million bbl/d to 2.2 million bbl/d</a> over the same period. The Financial Post has an <a href="http://business.financialpost.com/2013/03/06/will-chavezs-death-spoil-oil-sands-party/">article on the possible consequences for Canada</a>.</div>
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The basic fear is that if the Venezuelan oil industry gets its act back together it will provide a viable alternative to Canadian crude. <a href="http://en.wikipedia.org/wiki/PDVSA">PDVSA</a>, the Venezuelan state owned oil company, was basically used as a cashcow by Chavez - they weren't left with enough capital to maintain or expand production. More money for PDVSA would likely mean more production from Venezuela. Further, if the new Venezuelan government is less anti-American than the last, there could be reduced opposition to their oil by the US government. In fact, it seems to me if Venezuela has a big about-face the American government might want to encourage this better behaviour by pushing for more Venezuelan imports.</div>
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There are further issues, such as competition for labour and capital. The <a href="http://en.wikipedia.org/wiki/Orinoco_Belt">Orinoco Belt</a> consists of heavy oil and quite similar in size but easier to produce than Alberta's oilsands. The article says 3,000 Venezuelan workers came to Alberta when Chavez purged PDVSA, and those people might now go home.</div>
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Personally, I think the threat to Canada's oil industry is overblown. First off, there's no real indication that the new Venezuelan regime is going to be any better at managing the country's oil industry than the last. Chavez's vice president, Nicolas Maduro, is likely to win the election to replace him, and then he'll be president for 6 years. He seems to have the same bad ideas as his former boss, without the charisma, so I expect more of the same, particularly in Venezuelan-American relations.</div>
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Even if Venezuela does turn itself around, however, I don't think that means "instant oil competitor". It can take decades to build production capacity back up after years of neglect, <a href="http://www.wolframalpha.com/input/?t=crmtb01&f=ob&i=iraq%20oil%20production">as Iraq has shown</a>*.</div>
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Also, as Canadian exports to the US grew, so did pipeline capacity. There is now a real capability to export over 2 million barrels per day. Those pipelines aren't going to disappear, so it's probably going to remain very cost competitive for the US to pipe in oil from Canada compared to shipping it in from Venezuela. I think a much bigger threat to Canada's oil exports is increasing American domestic production; it is both cheaper and politically preferable to Canadian crude.</div>
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Anyway, I think the article is interesting in that it gives some global context to the oilsands. I think some of its conclusions might be a bit overblown, however.</div>
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* Iraq is only just now reaching the oil production levels it had under Saddam, and even that level is much lower than it would have been if it weren't for the crippling sanctions applied to the country's oil industry during the 90s</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-91243499025654307532013-03-11T10:37:00.002-06:002013-03-26T12:14:05.980-06:00NDP about-face on oilsands?<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-n4y3jMgA5jM/UT4DsvWeU5I/AAAAAAAAGDc/zNCXWOB6sOw/s1600/Cowboy+Tom.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="http://3.bp.blogspot.com/-n4y3jMgA5jM/UT4DsvWeU5I/AAAAAAAAGDc/zNCXWOB6sOw/s1600/Cowboy+Tom.jpg" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Picture of Mulclair cowboying up.<br />
From the article. No news yet on<br />
whether or not he's expecting.</td></tr>
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Maclean's has <a href="http://www2.macleans.ca/2013/03/08/the-ndp-discovers-the-oil-sands/">an interesting story</a> about an apparent reversal in the NDP on the oilsands. Thomas Mulclair, the party's leader, has recently been in Calgary making pretty positive noises at a bunch of oil people. They would now be "a partner for the development of Canada's energy resources", apparently.</div>
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This is of course a big change from the party's position in the past, where he blamed the oilsands for <a href="http://www.oilsandbox.com/2012/05/ndp-blames-oil-sands-for-loss-of.html">eastern Canada's economic woes</a> as well as the standard <a href="http://www.oilsandbox.com/2012/05/mulclair-changes-tack-on-oil-sands.html">environmental criticism</a>.</div>
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Why the change? Impossible to say for sure, but here's my opinion: As expected, sooner or later someone put together than the NDP, a party with deep labour ties, was sending a very anti-labour message in the union-rich industries of northern Alberta. At the same time, he'd already done his grandstanding/Alberta bashing to satisfy his (new) base in Quebec. Thinking they were no longer paying attention to the issue, the party has tried to soften its message to Albertans and other workers in resource industries, where they probably thinks they could pick up some seats, provincially if not federally. They have essentially adopted the Liberal position - support development, but only with constrained growth and only if operators are forced to refine their oil in Canada. As I've mentioned before, I don't think this is a particularly good policy, but it's certainly better than their previous policy of stopping new oilsands developments altogether*. It's also, not coincidentally, a very union-friendly view and demonstrates that unions still trump the environment in the NDP's priority list.</div>
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The article makes the interesting point that the environmental and labour positions of the party may collide if the industry tries to make an export pipeline through Quebec. </div>
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* The article says that was their old policy. I can't remember them taking such an extreme position.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com3tag:blogger.com,1999:blog-6301381579162645249.post-38428033225851756342013-03-03T11:50:00.003-07:002013-03-22T09:21:04.563-06:00Sunshine Oilsands - the next big thing or the next Oilsands Quest?<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-2Hs1GgrCeHo/UTOaqqbGhWI/AAAAAAAAGCI/jjiZpCA7ZY8/s1600/Sunshine+Logo.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://2.bp.blogspot.com/-2Hs1GgrCeHo/UTOaqqbGhWI/AAAAAAAAGCI/jjiZpCA7ZY8/s1600/Sunshine+Logo.jpg" /></a></div>
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Bloomberg has a <a href="http://www.bloomberg.com/news/2013-02-28/sunshine-oilsands-taps-china-for-output-boost-corporate-canada.html">piece</a> on <a href="http://www.sunshineoilsands.com/">Sunshine Oilsands</a>. </div>
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The money behind the company is largely Chinese, including Sinopec. They raised $580 million in an IPO in Hong Kong last March, and listed on the TSX in November. It listed at about HK$4.70 and is now trading at about <a href="http://finance.yahoo.com/echarts?s=2012.HK+Interactive#symbol=2012.hk;range=2y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">HK$2.70</a>, so things haven't exactly gone swimmingly on that front.</div>
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The article talks about the risks of being a small operator in the oilsands. Sunshine has apparently sought to counter this fear by tapping some of its huge owners (like Sinopec) for the capital it needs to get producing. The article doesn't talk about what I think is the biggest unknown for Sunshine: all its carbonate fields. Sunshine has a huge landbase for an oilsands company (the biggest in the province?) but much of it, like the <a href="http://www.sunshineoilsands.com/operations/harper.html">Harper field</a>, is carbonate, rather than clastic, which haven't really been demonstrated in an operating project yet. There are a few <a href="http://www.oilsandbox.com/2012/05/laracina-has-promising-carbonate.html">positive noises coming out about carbonates</a>, but suffice to say there are significant challenges that may or may not be economic to overcome.</div>
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Current production is only 500 barrels per day. They think they need $15 billion to properly develop the land. To do that they need JV partners with lots of money, and they need to do it when there are other companies trying to do the same thing, like Athabasca and Connacher, who may have better assets. At the same time, the whole oilsands industry seems to be facing a headwind from lower costs for oilsands crude (due to pipeline capacity issues and a glut of shale-oil in the states) and rising prices (due in part to a strong Canadian dollar).</div>
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In short, I think Sunshine faces an uphill battle. I wish them luck.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-8264088577808163902013-03-03T11:16:00.002-07:002013-03-03T11:16:49.001-07:00ConocoPhillips looking to divest some oilsands assets<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-GmQ5TPYdf74/UTOTds2rHiI/AAAAAAAAGCA/LFA8oPT2Q8U/s1600/ConocoPhillips-logo.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="126" src="http://1.bp.blogspot.com/-GmQ5TPYdf74/UTOTds2rHiI/AAAAAAAAGCA/LFA8oPT2Q8U/s320/ConocoPhillips-logo.jpg" width="320" /></a></div>
The Wall Street Journal is reporting that ConocoPhillips is looking to <a href="http://online.wsj.com/article/SB10001424127887323978104578332390851485754.html?mod=googlenews_wsj">sell some assets</a>, including some oilsands ones. The story is behind a paywall but <a href="http://www.hydrocarbonprocessing.com/Article/3162554/ConocoPhillips-looks-to-reduce-stakes-in-Australian-LNG-Canadian-oil-sands.html">BOOM</a>! You're welcome.<br />
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Reasoning is apparently that these assets (along with Australian LNG projects) are too expensive for what they're producing, particularly with the Canadian (and Australian) dollars so high. It's unclear which assets they had in mind, or if it's all of them. Conoco's main oilsands assets are Surmont (which it owns 100% of) and Christina Lake/Foster Creek (which it owns 50% of with Cenovus, who operates the properties). It was <a href="http://www.oilsandbox.com/2012/09/indian-companies-place-5-billion-on.html">looking to sell some of Surmont and some other little (or early) projects last year</a>, not sure what came of it in the end. Maybe this is the same process and they're just taking their time.ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-85953366226156574502013-03-03T11:01:00.002-07:002013-03-03T11:01:31.291-07:00US State Department says Keystone won't increase oilsands production<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-g3LtnpGF7Xc/UTOPayUJX2I/AAAAAAAAGB4/09DN12EwGIE/s1600/Keystone+pipe.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="180" src="http://4.bp.blogspot.com/-g3LtnpGF7Xc/UTOPayUJX2I/AAAAAAAAGB4/09DN12EwGIE/s320/Keystone+pipe.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Pipe for the original Keystone pipeline, 2008<br />Picture from Eric Hylden via <a href="http://www.ctvnews.ca/canada/keystone-xl-won-t-increase-oilsands-development-u-s-state-department-1.1177936">CTV</a></td></tr>
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A report released by the US State Department has opined that building the Keystone XL pipeline "<a href="http://www.blogger.com/won't%20have%20a%20major%20impact%20on%20Alberta's%20oilsands%20development">won't have a major impact on Alberta's oilsands development</a>". This is a tacit acknowledgement that the real reason for opposition to the pipeline isn't the risk that the pipeline itself poses (the report says it is no riskier than any other mode of transportation), but that it would encourage greater development of what is widely perceived as a dirty fuel. Saying that Keystone won't increase development is thus a strange way of hinting that they're getting ready to approve it, and indeed State Department approval was apparently a major hurdle the pipeline needed to get over.</div>
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Is the report correct? Probably not entirely - I think pipeline capacity could be a major dampener on oil sands projects if it doesn't grow significantly. But that's making the big assumption that Keystone is the only game in town, which it isn't. Although things look glum at the moment, further pipelines to the BC coast <a href="http://www.oilsandbox.com/2012/05/im-little-late-posting-it-but-last.html">are certainly possible</a>. I think that's what's written between the lines on this announcement - oilsands crude can either go to the US via Keystone or China via Northern Gateway. It's going to get extracted and sent somewhere either way, might as well make it America.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-47828185428564498702013-01-07T20:06:00.001-07:002013-01-15T09:26:40.484-07:00Calgary company tests carbon capture tech<div class="separator" style="clear: both; text-align: center;">
<iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='480' height='399' src='https://www.youtube.com/embed/GkEAA7VnyhE?feature=player_embedded' frameborder='0'></iframe></div>
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Alberta is often slammed for having the <a href="http://www.livesmartbc.ca/learn/emissions.html">second highest CO2 emissions per capita in Canada</a> (after Saskatchewan) in part because of oilsands emissions, although in greater part because of its reliance on coal for electricity generation. I think it's kind of neat, therefore, that a Calgary company called <a href="http://www.carbonengineering.com/">Carbon Engineering</a> is making a pilot plant that could <a href="http://www.nytimes.com/2013/01/06/business/pilot-plant-in-the-works-for-carbon-dioxide-cleansing.html?nl=todaysheadlines&emc=edit_th_20130106">potentially economically remove CO2 from the atmosphere</a>. That would be a lot more useful than existing scrubbing technology, which captures emissions from big industrial plants, like the clean coal powerplant that <a href="http://www.oilsandbox.com/2012/04/transalta-and-friends-cancel-carbon.html">TransAlta cancelled last year</a>, because it could be performed anywhere in the world, not just in a place that happens to be a large source of CO2 and have a suitable reservoir to sequester the CO2 in. It's also a lot harder, since CO2 is so much less concentrated in the air compared to a smokestack's emissions. If Carbon Engineering can do it, they could find themselves in a very profitable position.</div>
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It may be easier said than done of course. I think it all hinges on the price they can sequester the CO2 for. They're going for the angle that CO2 itself is a "valuable gas", although in practice it's not, since I doubt they'll ever be able to undercut the price of CO2 produced as a by-product in many oil and gas fields. Still pretty interesting, worth checking out!</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-41959147432883573122012-12-02T16:45:00.001-07:002012-12-02T16:49:01.751-07:00Susan Rice's energy holdings a potential conflict of interest<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-6625upPgm30/ULvnrNpxdSI/AAAAAAAAEmY/9Yn5DCJF4cg/s1600/Susan+Rice.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="201" src="http://4.bp.blogspot.com/-6625upPgm30/ULvnrNpxdSI/AAAAAAAAEmY/9Yn5DCJF4cg/s320/Susan+Rice.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Rice, looking conflicted.<br />
Picture stolen from <a href="http://www.policymic.com/articles/19243/susan-rice-why-republicans-will-block-the-leading-hillary-clinton-replacement">PolicyMic.com</a></td></tr>
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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.</div>
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Basically, it's because she and her husband <a href="http://www.businessweek.com/news/2012-11-29/environmental-group-spotlights-rice-s-oil-sands-stakes">hold $300 to $600 thousand in TransCanada stocks</a>. 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 <a href="http://www.imperialoil.ca/Canada-English/default.aspx">Imperial Oil</a> stocks, as well as shares in <a href="http://www.suncor.com/default.aspx">Suncor</a>, <a href="http://www.cenovus.com/">Cenovus </a>and <a href="http://www.cnrl.com/">CNRL</a>, all of which would probably benefit from approval of the pipeline.</div>
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In my opinion this is a valid concern. Rice can't be expected to act in an unbiased manner if she has such a large financial stake in the outcome. If she is named as secretary of state, I think she should be required to liquidate her holdings in these companies. That said, I would think she'd be fine with that, so to a degree I think this is a non-issue.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-35302500201465378532012-12-02T16:24:00.000-07:002012-12-02T16:24:43.876-07:00Athabasca Oil Corp. Sanctions Hangingstone Project<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-hJzGlzfzIbE/ULvgXMOfvII/AAAAAAAAEmA/snTfTVdp4g4/s1600/AOC+Thermal+map.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="273" src="http://3.bp.blogspot.com/-hJzGlzfzIbE/ULvgXMOfvII/AAAAAAAAEmA/snTfTVdp4g4/s320/AOC+Thermal+map.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Athabasca's properties. Note Grossmont is carbonate,<br />which means it may not be developed for a long time.</td></tr>
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Athabasca Oil Corp. (AOC) <a href="http://www.calgaryherald.com/business/energy-resources/Athabasca+sanctions+536M+oilsands+project/7622103/story.html">announced it had internally sanctioned</a> the first 12,000 barrel per day phase of its <a href="http://www.atha.com/operations/thermal-oil/hangingstone.html">Hangingstone project</a>. It had received government approval for the phase on October 3rd. First steam is expected in late 2014, and first production in early 2015.</div>
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Although the deal is not final, it will apparently proceed as a 50/50 venture with Kuwait Petroleum, <a href="http://www.oilsandbox.com/2012/09/kuwait-petroleum-may-invest-4-billion.html">as hinted at in September</a>. AOC estimates it will cost $536 million.</div>
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I'm interested to see how the project turns out. AOC is bullish on the property, as you'd expect, although I think there are some valid questions about it. For one, parts of the field are quite shallow, raising questions about whether they can operate the steam chambers at acceptable pressures for fear of rupturing their cap rock and having a steam blowout, <a href="http://www.ceaa.gc.ca/050/documents/45468/45468E.pdf">like Total had at Joslyn</a>. For another, PetroChina never showed much interest in the field when it bought interest in Dover and MacKay River, two of AOC's other fields. AOC has since sold its remaining share of MacKay River to PetroChina, but apparently holds its 40% interest in Dover.</div>
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So will Hangingstone prove to be a case of an unappreciated gem belatedly developed, or another project fated to failure because of its reservoir? Stay tuned for 2015, I suppose.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-66478110821518940512012-11-14T09:36:00.003-07:002012-11-14T09:37:25.510-07:00Husky's Sunrise on track<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-7zBL3tp4ZQ0/UKPEoBfr6cI/AAAAAAAAEV0/FzHnqF_pFBg/s1600/Sunrise+Central+Plant.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="225" src="http://3.bp.blogspot.com/-7zBL3tp4ZQ0/UKPEoBfr6cI/AAAAAAAAEV0/FzHnqF_pFBg/s400/Sunrise+Central+Plant.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">The Sunrise central plant. Stolen from the Husky website.</td></tr>
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<a href="http://www.edmontonjournal.com/business/Husky+Energy+profit+stable+reduced+expenses+offset+lower/7482649/story.html">Here</a>'s an article in the Edmonton Journal from a couple weeks ago. It talks about <a href="http://www.huskyenergy.com/operations/growthpillars/oilsands/sunrise/default.asp">Husky's Sunrise SAGD project</a> 60km North East of Fort McMurray. <br />
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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.</div>
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Hopefully this all goes well for Husky. Of course no discussion about their SAGD adventures would be complete without a mention of <a href="http://www.huskyenergy.com/operations/growthpillars/oilsands/tucker.asp">Tucker</a>. Although Husky puts a brave face on it in their website, that property was something of a disaster. To my knowledge it has never produced more than 10,000 barrels per day, out of the planned 30,000, and for much of its early life it was at about 5,000. It has an SOR of between 5 and 6, which means it's gotta be barely economic to operate, or at least will be if gas prices bounce back. What's more, because they were the 100% owner and operator, nobody was there to share the misery with Husky. About the best thing Husky can say about Tucker is that it was a <a href="http://blogs.calgaryherald.com/2011/10/03/mistakes-at-tucker-fuel-sunrise-plan-for-husky/">great learning experience</a> for Sunrise, as well as the industry at large. If you can't be a shining example, may as well be a grave warning to all who follow I guess.</div>
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My issue with this "learning experience" angle is that their main problem at Tucker - that they committed huge amounts of capital to the project before knowing how well they could produce from it - was a failure of common sense, not some obscure engineering process that could be learned. Who puts <a href="http://www.huskyenergy.com/news/2006/husky-announces-tucker-oil-sands-project-completion.asp">$500 million</a> into a field without a pilot? Well nobody does now, but in fairness maybe that's because Tucker showed everyone how badly they can get burned.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-80797059142273572852012-11-03T20:00:00.001-06:002012-11-03T20:11:16.884-06:00TransCanada and PetroChina plan Grand Rapids pipeline from Fort Mac to Edmonton<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-iPy7c8OLI1Q/UJXKQUmnfxI/AAAAAAAAEUo/BC-S8OwIwco/s1600/Evil+Plan.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="132" src="http://4.bp.blogspot.com/-iPy7c8OLI1Q/UJXKQUmnfxI/AAAAAAAAEUo/BC-S8OwIwco/s200/Evil+Plan.jpg" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">This child, who may be Asian but also <br />
may be Mexican, is clearly hatching <br />
an evil plan. PetroChina is definitely<br />
Asian and may or may not be hatching <br />
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TransCanada and Phoenix Energy Holdings (a unit of PetroChina) <a href="http://www.bloomberg.com/news/2012-10-29/transcanada-plans-3-billion-oil-sands-line-with-petrochina-2-.html">plan to build the "Grand Rapids Pipeline"</a>, 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.</div>
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It would be a 50/50 partnership and would be the first big foray of a Chinese company into Canadian pipelines. PetroChina (which is itself controlled by CNPC) <a href="http://www.doveropco.com/about-dover/our-projects/">expects to produce 400,000 barrels a day</a> from its Dover and MacKay River properties, which it bought Athabasca's remaining share of in March. Personally, I'll believe 400 thousand barrel a day SAGD project when I see it - I believe that would make it the biggest SAGD producer in the province, despite having a couple of second tier properties. I don't have a lot to base my opinion that they're second tier properties, except that if they were really as good as, say, Foster Creek and Christina Lake they'd already be producing, and Athabasca wouldn't have sold their remaining share in them to go and <a href="http://www.atha.com/operations/thermal-oil/hangingstone.html">diddle around with Hangingstone</a> and others which I believe are less than "slam dunk" properties. </div>
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Guess I got a little offtrack from the pipelines there. Anyway, I'm sure it won't be long until people start complaining about Chinese influence in the oil patch. Absent a map of the pipeline, I've attached a picture that embodies all our darkest fears about PetroChina and Chinese state-owned energy companies in general.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-52142969276457924482012-10-31T13:23:00.001-06:002012-10-31T14:37:41.512-06:00Companies buying up cheap gas, not expensive oil sands<div style="text-align: justify;">
Bloomberg <a href="http://www.bloomberg.com/news/2012-10-30/exxon-favors-gas-over-oil-sands-in-m-a-deals-corporate-canada.html">has an article</a> 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.</div>
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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!</div>
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The price differential between North American and Asian gas prices has become almost comical. As the article reports, Canadian prices are currently about $3.20 per GJ, while Japan buys LNG for about $16 per GJ. Understandably, North Americans are falling over themselves to start selling in this obviously much better market. The article says 5 LNG projects are planned for BC, and are meant to start coming on-line over the next few years. The people building the LNG plants want to lock up reserves for them to contract for export, and presumably others are betting North American gas prices will rise drastically as these plants come.</div>
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I think this has spooked the federal government, and I think that's why they recently surprised everyone by <a href="http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/petronas-progress-saga-all-about-protecting-turf/article4631324/">rejecting the acquisition of Progress Energy by Petronas</a> for $5.9 billion. I figure they might have thought a huge natural gas asset was being sold to the Malaysian state owned oil company at a low point in gas prices, and that in a few years it could be worth multiple times what it is now and the feds would look like total chumps for letting the deal go ahead. Ideally, the government is supposed to take a longer term outlook than private companies regarding the value of natural resources. Maybe the Canadian government is being quite savvy with this action, rather than backwards and protectionist as many appear to think. So why did the government let Sinopec <a href="http://business.financialpost.com/2011/10/10/sinopec-buys-calgary-based-daylight-energy/">buy Daylight Energy last year</a>, or <a href="http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/athabasca-deal-gives-china-an-oil-sands-project-of-its-own/article4085184/">let PetroChina become the soul owner of Athabasca's MacKay river property</a>? Because that was oil, and oil is at historically high prices right now. In my opinion there's a good chance the foreign buyers could end up being the chumps on some of these deals.</div>
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Green-lighting the ExxonMobil acquisition a little bit later puts some doubt on this theory, as does the fact that many people seem to think the Petronas deal <a href="http://www.theglobeandmail.com/globe-investor/inside-the-market/street-places-good-odds-on-progress-energy-takeover-succeeding/article4767184/">will go ahead after all</a>. Maybe I'm giving the government too much credit - maybe they just didn't like the idea of yet another Asian state owned energy company scooping up Canadian assets, but were happy with a private American one, even if it is reportedly an <a href="http://articles.baltimoresun.com/1998-12-02/news/1998336059_1_standard-oil-trust-oil-of-new-mobil-oil">Evil Empire</a>.</div>
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I know this article was pretty unrelated to the oil sands, but I thought it was too interesting not to talk about a bit. Although I've been saying this (incorrectly, or at least prematurely) for years, I think people should be buying shares in gas companies now, like Encana (which is trading at $22 on the NYSE, compared to its all time high of $94 during 2008, although that was presumably including the Cenovus assets that were spun out and are now worth more than Encana). I think we're at the tail end of a gas price trough roughly analogous to the price of oil during the 90s - irrationally low in hindsight. This has consequences for the oil sands: not only should smart money be investing in cheap gas companies rather than their bloated stocks (according to me), but when the price of gas does equalize with the rest of the world through the new LNG terminals (again according to me), their operations will get much more expensive because of their heavy reliance on natural gas, particularly for SAGD.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-35772236738204320882012-10-24T08:32:00.000-06:002012-10-24T08:33:16.480-06:00New Alberta government oil sands monitor<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-qTYTHaBpQXQ/UIf7YUwk4qI/AAAAAAAAEL0/s-KzKpyXnjk/s1600/Diana+McQueen.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="206" src="http://2.bp.blogspot.com/-qTYTHaBpQXQ/UIf7YUwk4qI/AAAAAAAAEL0/s-KzKpyXnjk/s320/Diana+McQueen.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Alberta environmental minister Diana McQueen.<br />
Picture stolen from the Edmonton Journal.</td></tr>
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A number of big news outlets have <a href="http://www.reuters.com/article/2012/10/17/us-alberta-oilsands-idUSBRE89G1PP20121017">reported on</a> the new provincial body to monitor the environmental impact of oil sands. The body is tentatively called the <a href="http://environment.alberta.ca/03379.html">Alberta Environment Management Agency</a> and will be jointly funded by industry and government. It will be headed by <a href="http://www.astech.ab.ca/awards/past-recipients/award-finalists/dr.-howard-e.-tennant/">Howard Tennant</a>, a former University of Lethbridge president who headed <a href="http://environment.gov.ab.ca/info/library/8699.pdf">a report</a> that ultimately led to the agency's creation, and report to the environmental minister, <a href="http://www.assembly.ab.ca/net/index.aspx?p=mla_bio&rnumber=56&leg=28">Diana McQueen</a>. Despite his protestations in that link, Mr Tennant is a scientist but teaches classes in management, to <a href="http://www.ratemyprofessors.com/ShowRatings.jsp?tid=474523&page=1">generally positive reviews</a>.</div>
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While everyone seems to agree more independent monitoring is necessary, there are <a href="http://www.edmontonjournal.com/business/Alberta+takes+step+toward+improved+environmental/7406133/story.html">some questions</a> about this new body. Its funding model hasn't been nailed down, and it could take up to 5 years to get running "at full capacity". The NDP predictably threw in some <a href="http://www.edmontonsun.com/2012/10/17/alberta-ndp-calls-new-environmental-monitoring-agency-nonsense">half baked criticism</a> about it not being independent and releasing "massaged data", despite any data being years away.</div>
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My position? The fact that there are still funding issues on this seems nuts to me. Maintaining the environment and the public perception of the industry's stewardship of the environment is a critical issue to the future of the oil sands. Getting this wrong could cost billions of dollars in the long run. Not having good data to combat the arguments of environmental groups more than willing to run loose and fast with the facts could lead to stupid things happening.</div>
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As for the NDP, I think they should ask this Rachel Notley character to be in the agency. Maybe she'd be willing to actually try to improve things, rather than taking shallow potshots at her opponents - let her try to put the constructive back into her criticism.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-46597970680397021492012-10-10T14:10:00.000-06:002012-10-10T14:10:47.082-06:00Waterloo studies find little long-distance environmental impact from oil sands development<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-4ASnvs4zswc/UHXV-YKP8cI/AAAAAAAAD5I/ITM5IAKBXH4/s1600/study+area.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="170" src="http://3.bp.blogspot.com/-4ASnvs4zswc/UHXV-YKP8cI/AAAAAAAAD5I/ITM5IAKBXH4/s320/study+area.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">The study area from one of the papers.</td></tr>
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As the elevator told me this morning, <a href="https://uwaterloo.ca/news/news/studies-find-alberta-oil-sands-development-not-major-source-long-distance-air-and-water">two studies</a> from the University of Waterloo <a href="http://www.timescolonist.com/business/Impact+oilsands+minimal+study+finds/7367606/story.html">have reported</a> little water and air pollution downwind/stream from the oil sands. In <a href="http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0046089">this study</a> they found no increased levels of "airborne metals" (like tiny microscopic airplanes, I assume) in the Peace-Athabasca Delta 200 km north, and in <a href="http://www.sciencedirect.com/science/article/pii/S0048969712009072">this paper</a> they found that according to lake-bed cores various heavy metal contaminants had <i>decreased</i> since the onset of oilsands development.</div>
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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 <a href="http://www.globalforestwatch.ca/">Global Forest Watch Canada</a>, said the data was too limited and the study area too small. Presumably they believe <a href="http://cahr.uvic.ca/nearbc/documents/2009/Alberta-Tar-Sands-Industry-Pollute.pdf">their more holistic and somewhat alarming paper</a> on the subject is a better view on the matter.</div>
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My view is, what's the complication here? The lake-cores they're doing are clearly pretty easy to do and the heavy metal testing nothing special, so why has it taken so long to do them? If Suncor and other operators think people like Lee and Timoney are exaggerating the long-distance environmental impact of the oil sands, which I think is certainly possible, why don't they spend the money and demonstrate that? This testing is peanuts compared to the sums the oil sands companies are used to spending, or the amount they stand to lose if activists manage to inaccurately and unfairly smear the industry. </div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-28696558850949174112012-10-09T13:14:00.000-06:002012-10-09T13:14:51.794-06:00Cornell students making oil sands toxin sensor<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-7msJUoa9U3c/UHR2C_vsSiI/AAAAAAAAD4s/sLUVQZ69sto/s1600/biosensor.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="213" src="http://2.bp.blogspot.com/-7msJUoa9U3c/UHR2C_vsSiI/AAAAAAAAD4s/sLUVQZ69sto/s320/biosensor.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Picture of the floating biosensor, stolen from the<br />
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Cornell University Genetically Engineered Machines is a group of students from the New York university <a href="http://www.news.cornell.edu/stories/Oct12/oilSands.html">working on a sensor</a> that detects things like napthalene and arsenic, funded by the <a href="http://www.osli.ca/about-osli">Oil Sands Leadership Initiative</a>. I didn't know arsenic was a concern for the industry, but on <a href="http://www.water-matters.org/story/329">further investigation</a>, at least some people think it is.</div>
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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.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0tag:blogger.com,1999:blog-6301381579162645249.post-28586354911339773682012-10-03T13:33:00.002-06:002012-10-03T13:33:36.379-06:00Cenovus buys Oilsands Quest assets<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-2pZO7WjxG4E/UGyS04X2AEI/AAAAAAAAD0Q/R-o9oJJIcCE/s1600/oilsands+quest+map.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="192" src="http://2.bp.blogspot.com/-2pZO7WjxG4E/UGyS04X2AEI/AAAAAAAAD0Q/R-o9oJJIcCE/s320/oilsands+quest+map.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Map showing Oilsands Quest's assets.<br />Picture ruthlessly taken from their website.</td></tr>
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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 <a href="http://www.businessweek.com/ap/2012-10-02/cenovus-gets-approval-for-oilsands-quest-purchase">scooped up by Cenovus</a> for $10 million.</div>
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Some of the properties are apparently very close to Cenovus's <a href="http://www.cenovus.com/operations/oil/telephone-lake.html">Telephone Lake</a> property. <a href="http://www.oilsandbox.com/2012/04/cenovus-releases-first-quarter-results.html">Last time I heard</a>, Cenovus was still looking for a partner to help develop that one and didn't have much in the way of interest. I wonder if Telephone Lake also has caprock issues dampening industry opinions on it?</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com1tag:blogger.com,1999:blog-6301381579162645249.post-54933010073887147392012-10-03T13:06:00.001-06:002012-10-03T13:10:42.866-06:00Baytex buying oil sands property in Cold Lake<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-jQYjvChKoYA/UGyMWMSF_vI/AAAAAAAADz8/HjD-uSk4JVQ/s1600/baytex.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="111" src="http://4.bp.blogspot.com/-jQYjvChKoYA/UGyMWMSF_vI/AAAAAAAADz8/HjD-uSk4JVQ/s200/baytex.jpg" width="200" /></a></div>
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<a href="http://www.baytex.ab.ca/">Baytex</a> is a medium size, Calgary based oil and gas producer. They have <a href="http://www.calgaryherald.com/business/energy-resources/Baytex+buys+Cold+Lake+oilsands+project+120M/7334009/story.html">recently bought a Cold Lake oil sands property for $120 million</a>. Although the seller is remaining private, everyone seems to think it's the evil Koch brothers selling as part of their oil sands divestiture <a href="http://www.oilsandbox.com/2012/06/koch-twins-to-divest-oil-sands-assets.html">I wrote about in June</a>.</div>
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The property has ERCB approval for a SAGD project of up to 10,000 barrels per day on the 1,200 hectare property. They say they're going to make a pilot project next year, and if that works they'll start making a 5,000 barrel per day project to start production in 2016.</div>
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Baytex has some thermal experience at its <a href="http://www.baytex.ab.ca/operations/operationshome/seal-area.cfm">Seal</a> (CSS) and <a href="http://www.baytex.ab.ca/operations/operationshome/lloydminster-area.cfm">Kerrobert</a> (SAGD) projects, but from what I gather most of their production is currently heavy conventional or shale oil. They also produce some gas, but understandably seem to be downplaying that fact at the moment.</div>
ADShttp://www.blogger.com/profile/00860058255151741355noreply@blogger.com0