MAY 2008 Issue
doing business
Royalty Tweaks Target Deep Reserves
BY NORDAHL FLAKSTAD
Freelance Writer
The Government of Alberta has introduced two new programs expected to yield royalty breaks of $1 billion over five years and to encourage the continued development of deep, high-cost oil and gas reserves.
The changes address unintended consequences of the royalty increases announced last October. There were concerns then that some deep oil and gas reserves might become uneconomic to develop under the new framework.
“The province is introducing these programs to enable producers to develop those oil and gas resources that are the most costly to access but offer the greatest potential,” said the Hon. Mel Knight, Alberta Energy Minister.
ARC May Investigate
Nuclear Options
With Idaho Lab
Alberta Research Council has signed a memorandum of understanding with the Idaho National Laboratory on a series of initiatives tied to the potential of nuclear energy in Alberta. INL, a U.S. Department of Energy lab in Idaho Falls, employs 3,800 scientists, researchers and support staff in its energy systems work.
The two organizations want to develop an advisory report on the potential introduction of nuclear energy here, for electrical generation and interaction with oilsands development. The work covers energy and environmental research and development.
ConocoPhillips and BP Unveil Planned Alaska Gas Pipeline
BP PLC, the current operator of the Alaska oil pipeline, will join ConocoPhillips to develop Denali — the Alaska Gas Pipeline. The 1,126-km pipeline would move four billion cubic feet of natural gas per day to reach the Lower 48. It would be North America’s largest-ever, private-sector construction project.
BP and ConocoPhillips will spend $600 million by the end of 2010 to reach the first major project milestone, an open season to seek customers willing to make long-term commitments.
The project would entail a gas-treatment plant on Alaska’s North Slope and a large-diameter pipeline through Alaska, the Yukon and B.C., and at least into Alberta. BP and ConocoPhillips will seek other equity partners, including pipeline companies, to add value to the project and help manage risks.
The proposal follows an earlier announcement by TransCanada Corp. to move natural gas south via a pipeline stretching more than 2,700 km from Prudhoe Bay, Alaska. It would follow the existing trans-Alaska oil pipeline and the Alaska Highway, pass through northern British Columbia and link with the pipeline grid in northwestern Alberta.
Edmonton to Fund
New LRT Tunnel
The City of Edmonton transportation and public works committee has approved spending $45 million for a 180-metre tunnel to form the first leg of a northwest branch of the city’s light rail transit system. Later this year, city council will consider an $800-million LRT extension to connect downtown to the Northern Alberta Institute of Technology.
The funding will allow the tunnel to be built underneath — and in conjunction with – the parkade of a new EPCOR Utilities tower. The EPCOR project is scheduled to begin later this year.
Government Issues
Bioenergy Grants
The Government of Alberta has announced bioenergy grants worth more than $17 million to strengthen the industry. Fifteen companies will receive grants ranging from $18,500 to $5 million for new facilities and research.
Recipients include Weyerhaeuser Company Ltd. and Alberta-Pacific Forest Products Inc.
Alberta’s Bioenergy Plan, announced in 2006, commits $239 million over five years for building the market and encouraging private investment. Grants so far total 61 under two programs — one for commercialization and market development, the other for infrastructure development.
Design Group Joins Stantec
Stantec has acquired a Petaluma, Calif., firm with more than 170 employees in offices in western U.S. Founded in 1966, RHL Design Group Inc. has a diversified design team for program and project management, and comprehensive integrated design services.
The firm has worked on more than 18,000 projects for major international corporate clients, including retailers, restaurant chains, banks, auto dealerships, rental car companies, government agencies and oil companies.
Athabasca Northern
Features in CN Spending
CN Rail will invest about $430 million in rail infrastructure projects in Western Canada this year. The spending includes upgrading its recently acquired Athabasca Northern Railway, which terminates near Fort McMurray.
In addition, CN will continue upgrading other former Northern Alberta short lines it purchased in 2006.
CN’s western region capital program is part of a plan to invest about $1.5 billion company-wide in 2008. More than $1.1 billion will be focused on track infrastructure.
Research Targets Use
Of Oilsands Tailings
Titanium Corp. Inc. has received a $3.5-million grant through Alberta’s Energy Innovation Fund to research value-added opportunities and environmental benefits of stripping hydrocarbons and minerals, including titanium, from oilsands tailings.
More than 90 per cent of the world’s titanium minerals are sold for the production of pigments, which end up in paints, coatings, paper and plastics. Another important titanium use is in alloys.
Zircon sand is in high demand worldwide and is used by the ceramic, refractory and chemical industries. Naphtha may also be recovered through the research project and then reused for processing bitumen prior to upgrading.
Petro-Canada Brings
Steel Fabrication
To Oilsands Project
Petro-Canada will set up its own steel fabrication plant for the $19-billion, Fort Hills mining and upgrading project north of Fort McMurray. The plan to build modular units involves bringing in additional foreign workers.
Petro-Canada leads Fort Hills with a 60 per cent interest. Partners UTS Energy Corp. and Teck Cominco hold 20 per cent each.
Neil Camarta, P.Eng., Petro-Canada’s vice-president, oilsands, says the plan to fabricate near Fort Hills is more economic than the common oilsands industry practice — constructing the units in Edmonton and trucking them.
Last Year a Bad One
For Forest Sector
The year 2007 was one of the worst on record for the province’s forest sector, says the Alberta Forest Products Association. The $2.7 billion in lumber, panelboard, pulp and paper represented a decline of $446.5 million from 2006.
The value of Alberta forest products has fallen 36.2 per cent from the most recent high-water year of 2004, when it was $4.3 billion.
TransCanada Becomes
Major NY Power Player
For $2.9 billion US, a subsidiary of TransCanada Corp. of Calgary has acquired the 2,480-MW Ravenswood Generating Facility in Queens, New York, from U.K.-based National Grid PLC.
Ravenswood is a multiple-unit, gas-and-oil-fired generating plant using steam turbine, combustion turbine and combined-cycle technologies. It can meet about 21 per cent of New York City’s overall peak load.
Apache Corp Releases Results
Apache Corp. reports that three new wells in a shale play in northeastern B.C. have found gas. The horizontal wells drilled in the Ootla shale play have test flowed at 8.8, 6.1 and 5.3 million cubic feet per day.
The play is about 100 km from Fort Nelson and the three wells were drilled during the 2008 winter season. They’re producing from the Muskwa shale and flowing through Apache’s Missile gas plant.
Natural Resources Canada Supports U of C
Clean Energy Research
Natural Resources Canada is advancing clean energy technology in Canada through $5 million in support for the University of Calgary’s Institute for Sustainable Energy, Environment and Economy.
The commitment is intended to ensure the institute can collaborate with stakeholders on outstanding regulatory, economic and technological issues in response to the previously released report of the Canada–Alberta ecoENERGY Carbon Capture and Storage Task Force.
Total SA Aims
For Higher Output
Total SA has increased its targeted initial output from its planned Edmonton-area upgrader by 20,000 barrels per day to 150,000 bbl/d. However, the company now projects a one-year delay, to 2015, in completing the $7-to-$9-billion facility.
The upgrader eventually will process up to 295,000 bbl/d from Total’s Joslyn oilsands project near Fort McMurray.
Plains All American
Buys Rainbow Pipe Line
Imperial Oil Limited has announced that the shareholders of Rainbow Pipe Line Company Ltd. have sold the pipeline company to Plains All American Pipeline LP for $540 million. Imperial owned a third of Rainbow.
Rainbow operates 473 km of 20-inch pipe from Zama Lake to Utikuma Lake and 297 km of 24-inch pipe from Utikuma Lake to Edmonton. The entire line is in Alberta.
Agrium Inc. Buys
European Distributor
Agrium Inc. of Calgary has entered into an exclusive agreement to acquire a 70 per cent equity position in Common Market Fertilizers SA, one of Western Europe’s largest fertilizer distribution companies.
Gold Mining Companies
Decide to Join Forces
Metallica Resources Inc., New Gold Inc. and Peak Gold Ltd. have signed a letter of agreement to create a globally diversified gold company with a market capitalization of about $1.6 billion. Under the New Gold Inc. banner, the new company will own operating gold mines in Australia, Brazil and Mexico.
Projects under development include the New Afton mine near Kamloops, scheduled to start producing in late 2009.