September 2006 ISSUE


Going Up: Increases Hit Energy Sector


Freelance Writer

Dollars in the Sand

Dollars in the Sand
Producing crude from the oil sands has become more lucrative with the rising oil prices. But it’s also become more expensive. The Athabasca Oil Sands Project, which includes the Muskeg River Mine shown here, is no exception

Costs of the planned expansion of the Athabasca Oil Sands Project are expected to triple to as much as $12.8 billion, Shell Canada says.

The project began producing 155,000 bbl/d in 2003. Through expansion of its Fort McMurray-area mine and its Scotford upgrader near Edmonton, Shell expects to add 100,000 bbl/d of production in 2010.

In addition to Shell, the major shareholder, project investors include minority partners Chevron Canada and Western Oil Sands

Costs Rising For Long Lake Project

OPTI Canada Inc., a 50-50 partner with Nexen Inc., says the cost of its Long Lake steam injection oil sands project is expected to rise by 10 per cent to $4.2 billion.

The project was about three-quarters completed by mid-summer and its steam-assisted gravity drainage operation is expected to begin operating later this year. A related upgrader should start up in fall 2007.

Mackenzie Pipeline Hearings Extended

Robert Hornal, chair of hearings into the Mackenzie pipeline, has announced that the process is now expected to extend into mid-April. Earlier plans were to wrap up the hearings in mid-December.
Imperial Oil, which is spearheading the pipeline initiative, says the delay will affect project costs, schedules and start-up.

Oil Sands Will Eat More Natural Gas

Ziff Energy Group says natural gas supply requirements for Alberta’s oil sands will increase to 1.8 billion cubic feet per day by 2012, and to 2.4 Bcf/d by 2015 — quadruple the current demand. That’s twice the capacity of the proposed Mackenzie Valley pipeline.

The predictions in Ziff’s 14-page report take into account the needs of the seven oil sands projects under construction and 14 proposed. The report predicts the increase in demand by oil sands operations will be accompanied by declining Canadian natural gas exports to the U.S.

Shear Minerals, Diamonds North Reach Agreement

A new agreement could see Shear Minerals Ltd. of Edmonton earn a 50 per cent interest in about 42,000 acres of claims. The claims lie within the southwest portion of Diamonds North Resources Ltd.’s Amaruk project at Pelly Bay, Nunavut.

It could prove lucrative, if nearby kimberlite finds are any indication. The new Sakari property is adjacent to the Darby project, where Indicator Minerals Inc. and Teck Cominco Ltd. recently announced a kimberlite field.

In other industry news, if Stornoway Diamond Corp. has its way, it will “create Canada’s premier, growth-oriented diamond exploration and development company,” says a company new release.
How so? Stornoway is bidding on all the outstanding shares of Ashton Mining of Canada Ltd. and of Contact Diamond Corp.

Stornoway already has exposure to close to 18 million acres of prospective diamond properties in under-explored regions. These are in 17 separate project areas in Nunavut, Alberta, Manitoba, the Northwest Territories and Botswana.

ATCO to Build Housing For Athabasca Oil Sands

 ATCO Structures Inc. will manufacture, supply and install the first phase of well-equipped housing for trades people and management personnel working on a Shell Canada oil sands project. Called Albian Village, the site will serve Shell’s Athabasca Oil Sands Project Upstream Expansion #1, north of Fort McMurray.

 Home for 800 people in the first phase — but capable of expansion for another 1,700 — Albian Village will feature a 115,000-square-foot core building with a gymnasium, a running track, workout space and equipment, a lounge, a lecture hall, a dining area and elevated corridors.

The site is 10 kilometres southeast of Shell’s existing Muskeg River Mine. Subcontractor Clark Builders will complete part of the village design, including the core building.

U.S. Regulator Gives Nod To Crossborder Power Link

The U.S. Federal Energy Commission has approved plans for the first-ever direct link between the U.S. and the Alberta power grid. Montana Alberta Tie Ltd. will create a line allowing transmission of 300 MW of power each direction between Alberta and Montana.

The link, to be built by Tonbridge Power Inc. of Toronto from Lethbridge to Great Falls, is expected to provide service in April 2007.

Northern Lights To Supply Agrium

Agrium Inc. plans to have Northern Lights Partnership supply it with hydrogen and other products from a heavy upgrader and gasification plant near Redwater in Sturgeon County, north of Edmonton.
The planned, 100,000-bbl/d plant will deliver hydrogen to Agrium’s nitrogen and phosphate operations in Redwater, replacing natural gas as the feedstock.

Northern Lights is a partnership between Synenco Energy Inc. and SinoCanada Petroleum Corp. 

Partnership Formed For Kitimat Line

A new partnership will build a natural gas pipeline in north central B.C. from Kitimat to Summit Lake. Pacific Northern Gas Ltd. and Kitimat LNG Inc. have formed the Pacific Trail Pipelines Limited Partnership.

The 50/50 partnership is actually between Pacific Northern Gas and Galveston LNG Inc., Kitimat LNG’s parent company. It’s embarking on a project that entails the construction of about 470 km of 30- or 36-inch pipeline, plus compression facilities.

The line, expected to be operational in late 2009, will serve Kitimat LNG’s proposed liquefied natural gas import, regasification and send-out terminal.

EPCOR Buys Into Waste Heat

EPCOR Power LP, an income trust 31 per cent owned by EPCOR Utilities Inc., has purchased Primary Energy Ventures LLC of Chicago for $380 million US. Primary’s 13 plants, located from New Jersey to California, specialize in production of power from waste products, blast furnance exhaust and other sources.

Firms Awarded Contracts To Maintain Highways

Alberta Infrastructure and Transportation has awarded or renewed several Alberta highway maintenance contracts.

Ontario’s Carillion Canada Inc. is the new contractor for five maintenance areas in northeastern Alberta, stretching from Highway 13 near Killam to north of Fort McMurray, and from the Saskatchewan border to just east of Edmonton. Carillion’s first Alberta highway maintenance contract is worth nearly $37 million per year for seven years.

Meanwhile, Alberta Highway Services Ltd. picked up four new maintenance areas in west central Alberta, stretching from Banff National Park to Red Deer and from Airdrie to Wetaskiwin. The company also currently maintains highways from just south of Edmonton to Slave Lake.

Ledcor Alberta Ltd. retained three maintenance areas for another six years in east central Alberta, and Volker Stevin Contracting retained seven maintenance areas in southern Alberta.

Contractors’ responsibilities include snow clearing and ice control, gravel road maintenance, pavement repair, crack filling, line painting, sign installation and maintenance, guard rail installation and repair, bridge maintenance, debris removal, and cutting grass in ditches and medians.

More Twinning  Under Way

Construction has started in northwest Alberta to twin eight kilometres of Highway 2 in the Sexsmith area. The section is between the highway’s junction with Highway 672 and Highway 59.
The $28-million project also includes removal of a small concrete bridge and several culverts from beneath the road surface. These will be replaced by three new bridge culverts, allowing the newly divided road to open to traffic in October 2007.

PTAC Launches Carbon Dioxide Study

Petroleum Technology Alliance Canada is spearheading an industry coalition to study the potential benefits of capturing, cleaning and transporting carbon dioxide from industrial operations in the Edmonton area. The study, with federal and Alberta Government participation, could be ready by January and pave the way for construction of CO2 recovery infrastructure.

PTAC is a Calgary-based not-for-profit association that facilitates collaborative research in the Canadian upstream conventional oil and gas industry.

North American Going Public

North American Energy Partners Inc., a large construction organization based in Acheson, Alta., is taking steps to change from a privately held to a public

Petrobank Fires Up New Recovery Method

Petrobank Energy and Resources Ltd. has started up a trademarked, toe-to-heel air injection process at its Whitesands lease, 120 km south of Fort McMurray.

The process combines a vertical air injection well with a horizontal production well to recover bitumen and heavy oil. Petrobank is using three pairs of wells during the $30-million trials.

Pengrowth Buys Esprit Energy

Pengrowth Energy Trust has purchased Esprit Energy Trust. The transaction increases Pengrowth’s value by more than $6 billion.

By adding 18,350 barrels of oil equivalent per day production from Esprit, the purchase increases Pengrowth’s output to 75,000 b.o.e./d.