October 2007 Issue
DOING BUSINESS
Drilling Activity Shows Sharp Decline
BY NORDAHL FLAKSTAD
Freelance Writer
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CROSSING THE CANYON |
The Petroleum Services Association of Canada projects a 24 per cent decline
in the number of wells drilled this year in Canada. It forecasts 17,650 wells
will be drilled in Canada in 2007, versus 23,306 in 2006. Low spot prices for
natural gas, along with a buoyant Canadian dollar, are among the causes.
Barely a third — just 36 per cent — of the drilling industry’s
rigs were active at the end of August, compared with 62 per cent a year earlier.
Industry observers predict con-tinued low activity could lead to consolidation and realignments within the drilling sector in the next year.
Premier Pauses To Ponder Royalties
At press time, Premier Ed Stelmach had not decided what government action will
follow a report calling for an increase in oil and gas royalties. Chaired by
Bill Hunter, the former president of Al-Pac, an expert panel recommended the
province’s take increase by 20 per cent or about $2 billion a year.
Mr. Hunter said royalty rates have not kept pace with changes in the resource base and Albertans have been short-changed. Detractors, however, say acceptance of the recommended changes would drive oil and gas investment away from the province.
EPCOR Looks to Supply Recycled Water to Upgraders
EPCOR Inc. plans to provide up to 160 million litres a day of
recycled water to new upgraders under construction or planned in the Edmonton
area. Council has approved a contract to have the city-owned utility market greywater
from its water-processing plant. Each day, the plant sends about 270 million
litres of treated water to the North Saskatchewan River — and each upgrader
requires 20 to 30 million litres of water.
Energy Alberta Corp. Picks Site for Reactor
Energy Alberta Corporation has chosen a site adjacent to Lac Cardinal and about
30 kilometres west of the town of Peace River as the preferred site for what
could be Alberta’s first nuclear power plant.
Privately held Energy Alberta has filed an application with the Canadian Nuclear
Safety Commission. The application seeks a licence to prepare the site for the
plant
Energy Alberta has teamed with Atomic Energy of Canada Limited with a view to
eventually setting up two, twin-unit ACR-1000 Advanced CANDU reactors. Initial
plans call for construction of one twin-unit, which could produce up to 2,200
MW of electricity when completed in 2017. Cost of the project has been placed
at $6.2 billion.
Edmonton to Get New ‘Mini’ Refinery
A consortium led by Corrillo Energy LP of Calgary is planning the first new “mini” refinery
in the Edmonton area for almost a quarter century.
To be located next to Petro-Canada’s existing Edmonton refinery, the $300-million, 36,500-barrel-a-day plant is scheduled for completion in 2010. Condensate will be its main raw material.
Project sponsor is Beaver Hills Processing GP Inc. Besides half-owner Corrillo, Beaver Hills is owned by Gibson Energy Ltd. and Parkland Income Fund, a Red Deer-based fuel retailer. Parkland will market about half of the proposed facility’s output through its Fas Gas, RT Fuels and Short Stop service stations.
SNC-Lavalin Inc. Buys Indian Firm
SNC-Lavalin Inc. has acquired Span Consultants Pvt. Ltd., an
engineering firm headquartered in New Delhi, with local offices in Bangalore,
Mumbai and Kolkata.
Span has almost 700 employees and specializes in infrastructure and environment. It’s currently working on projects throughout India, including several major road projects.
Keyera Increases Underground Storage
In the Fort Saskatchewan area, Keyera Facilities Income Fund is
expanding its processing and storage capacity for natural gas liquid.
The storage expansion entails mining four new underground caverns and the construction of a new brine pond. The project is expected to add three million barrels of storage for condensate, propane, butane and other hydrocarbons.
Work will begin next year and is expected to take five or six years. Estimated cost is $70 to $80 million.
Park Bridge Opens On Trans-Canada
Ahead of schedule, construction of a large bridge on the Trans-Canada Highway
near Golden is finished. The new Park Bridge traverses Kicking Horse Canyon in
B.C.
Constructed under Phase 2 of the Kicking Horse Canyon Project, the 405-metre span features five piers reaching as high as 90 metres. Nearly six km of new, four-lane, realigned highway have also been completed, approaching the bridge. The rest of Phase 2 will be completed in January.
The Government of Canada provided $62.5 million and the Province of British Columbia $67.5 million to complete Phase 2, which is estimated to cost $130 million.
Through a public-private partnership with the province, the Trans-Park Highway Group designed, built and financed the improvements. It will also be in charge of maintenance of the entire 26-km section of the highway between Golden and Yoho National Park.
The $765-million Phase 3 of the project is the complex upgrading of 17 km of the Trans-Canada to four lanes. B.C.’s Ministry of Transportation completed conceptual planning studies in 2004 and preliminary engineering studies are taking place. Phase 1, involving the new Yoho Bridge, wrapped up in the fall of 2006 after more than five years.
Suncor and Partners Build Private Airstrip
Suncor Energy Inc. will become the operator and part owner of
a private airstrip in northeastern Alberta. The Fort McKay/Firebag Aerodrome
will serve oilsands operations belonging to Suncor and its partners in the project.
The 6,900-foot runway, co-owned by Synenco Energy Inc. (through Northern Lights Partnership) and Husky Energy Inc., will be built to accommodate Boeing 737-800 jets and be completed by the end of the year. Its related infrastructure will include a terminal building, and maintenance and emergency services buildings.
More North-South Links Needed in Alberta
The Alberta Electric System Operator foresees the need for more
transmission — beyond the 500-kilovolt Calgary-Edmonton link already proposed
but just rejected by the Alberta Energy and Utilities Board.
Speaking at a recent energy conference in Calgary, Dale McMaster, the operator’s president, said: “The fact is we need transmission. We need to reinforce the system if we are going to retain reliability of supply. That will be a reality for years to come.”
Rainbow Pipeline Placed on Sales Block
Imperial Oil Ltd. and others have placed a for sale sign on
a property they’re involved in, the 780-kilometre Rainbow oil pipeline
between Zama, Alta., and Edmonton. Exxon Mobil Corp. and Royal
Dutch Shell PLC co-own the line, which links with Enbridge lines,
Trans Mountain lines and Edmonton-area refineries.
SaskPower Scrubs Clean-Coal Plant
SaskPower has set aside plans to build a 300-megawatt coal generating station,
referred to as a “near-zero” emission operation.
John Nilson, minister responsible for the provincially controlled power utility, said that Saskatchewan needs new power generation by 2010. Such a clean coal plant can’t be built within such strict timelines.
SaskPower had priced the plant at $1.5 billion but the figure has risen in
recent months. As an alternative, the utility will spend $525 million to install
400 MW of capacity based on natural-gas turbine generation.
Meanwhile, EPCOR is reportedly proceeding with plans to build
a clean coal plant in Alberta by 2015.
New Interchange Connects Three Highways
Construction is underway on a $40-million interchange connecting three
Calgary-area highways. The new interchange should be open to traffic by September
2008 at Langdon, east of the city.
It will provide a safer and more efficient connection for motorists using
highways 1, 9, and 797.
Meanwhile, Alberta Infrastructure and Transportation has announced that, much
further north, work has begun on a Grande Prairie bypass. Construction has started
on a two-lane, Highway 43 bridge over Highway 2 at a cost of $5.2 million.
Construction of the $5.2-million overpass will be completed by October 2008.
Edmonton Approves Contentious Project
City of Edmonton council has approved construction of an interchange
on the city’s southern approaches at 23rd Avenue and Gateway Boulevard — despite
major concerns about increased costs.
In deciding to proceed with the $260-million project, council did not spell out financing plans for the initiative, which has generated controversy as projected costs rose.
Syncrude Complying With Order
Syncrude Canada Ltd. says it will document actions already taken
to comply with an environmental protection order from Alberta Environment relating
to emissions from the company’s Mildred Lake effluent pond, north of Fort
McMurray.
Between October 2006 and May 2007, Syncrude’s effluent pond sporadically experienced elevated levels of smelly compounds. In response, by mid-2007 Syncrude acted to modify equipment and operating practices, and to set performance expectations.
“We take our responsibilities in the safety, health and environment area very seriously, and we will fully comply with the order issued,” said Marc Theriault, Syncrude’s vice-president of production.
Kinder Morgan Begins Anchor Loop Project
Kinder Morgan Canada has begun construction on its $443-million
Anchor Loop project, the second phase of a pipeline system expansion that will
increase capacity on Trans Mountain to 300,000 barrels per day from about 260,000.
The project is expected to be completed in November 2008.
Trans Mountain transports crude oil and refined products from Edmonton to terminals and refineries in British Columbia and Washington State. Earlier this year, Kinder Morgan Canada commissioned 11 new pump stations to boost capacity on Trans Mountain to 260,000 from 225,000 bbl/d. The pipeline has been operating at capacity since then.
Land Use Study Underway Near Edmonton Airport
EBA Engineering Consultants Ltd. and EXH Engineering
Services Ltd. are preparing a concept plan for suitable uses of 4,000
acres of agricultural land, north and west of the Edmonton International Airport. Leduc County is
initiating the work.
Dow Chemical Canada Sells its Soda
Dow Chemical Canada Inc. has sold its caustic soda business
in Western Canada to Univar Canada Ltd. This sale includes the
West Coast Distribution Centre terminal assets, which consist of marine, rail
and truck facilities in North Vancouver, as well as miscellaneous equipment.
Devon Sells Properties, Concentrates on Jackfish
Project
Devon Energy Corp. is selling some of its oilsands properties
in northeastern Alberta as it concentrates on the development of its Jackfish
Project, 15 km southeast of Conklin, Alta. Jackfish will use SAGD technology
to extract 35,000 bbl/d over its life.
Construction began in the first quarter of 2005, with full production targeted
for 2008.
Saskatchewan Sells First Oilsands Leases
Saskatchewan has for the first time opened bids for Crown oilsands and oil shale
rights. The sales brought in $3.3 million, with the biggest buyer being Oilsands
Quest Inc. of Calgary. It paid $2.25 million for six blocks and oilsands exploration
licences.
Cost Continues to Rise For North West Upgrader
North West Upgrading Inc., the proponent of an oilsands upgrader near Edmonton,
has signalled a further increase in the project’s prospective cost and
has announced that it is seeking potential project partners. The upgrader now
is expected to cost more than $4 billion, a further increase from the 16 per
cent projected cost rise to $2.9 billion announced by North West in May.