DOING BUSINESS

Going West – Imperial Oil Plans Move to Calgary

Editor’s Note: Doing Business is a roundup of news and developments in the business end of engineering, geology and geophysics.

BY NORDAHL FLAKSTAD
Freelance Writer

Imperial Oil Ltd. will get closer to the action by shifting its head office to Calgary from Toronto. The move will affect approximately 300 head office positions in a company that has 6,300 employees Canada-wide. Imperial becomes the last major integrated oil company to shift its headquarters to Canada’s oil and gas capital.

Imperial expects to complete the move by August 2005. According to Imperial CEO Ted Hearn, “Many of our major initiatives are located in Western Canada and the North. This move will enable us to strengthen our focus on these key priorities.”

Genesee Phase 3 Completed With Injury-Free Record
Owners, contractors and workers at Genesee Phase 3 power plant west of Edmonton joined forces recently to celebrate two million hours of construction work without a lost-time injury. To mark the occasion, a $60,000 donation has been made to STARS Air Ambulance.

Substantive construction on the $695-million EPCOR and TransAlta joint venture was completed in July under the direction of the principal construction contractor, Hitachi Canada.

The project is on time and on budget, and commissioning activities are now underway. More than 2,000 trades people, represented by 16 unions, and contractors worked at the generation facility during peak periods.

Think Tank Says High-Speed Rail Could Succeed
A high-speed passenger train linking Calgary and Edmonton could be a viable proposition, says a report by the Van Horne Institute, a transportation think tank at the University of Calgary. The institute’s pre-feasibility study, worth $800,000 in federal and provincial money, places the cost of the rail connection between $1.7 and $3.4 billion. The line would require extensive infrastructure work, including new bridges as well as tunnels to replace level crossings.

One of two options the study considered was a high-speed train similar to France’s TGVs running on dedicated track at 300 kilometres per hour. A slower (230 km/h) alternative would use the existing Canadian Pacific and Bombardier’s JetTrain, which can quickly adjust speed depending on roadbed conditions.

Pipeline Plans Filed With Regulators
Proponents of the Mackenzie Valley Pipeline have filed applications with regulators for what is now a $7-billion project — an increase of $2 billion over earlier projections.
In addition to the 1,220-km gas line connecting Inuvik and northwestern Alberta, the project now envisions a 475-km liquids pipeline. It would carry liquid gas byproducts to the existing Norman Wells pipeline owned by Enbridge Inc.

Completion of the Mackenzie project is targeted for 2009-2010 and will require a 7,000-member workforce. A go-ahead will depend on final cost estimates and the regulatory process, which involves the National Energy Board and a joint environmental review panel with federal, provincial and aboriginal participation.

The ownership consortium includes Imperial Oil, ConocoPhillips, Shell Canada and the Aboriginal Pipeline Group.

Meanwhile, projections prepared in connection with the consortium’s application indicate that when the 1.2-billion-cubic-feet-per-day pipeline comes on stream in 2010, Alberta oilsands operations alone will require an estimated 1.1 billion cu. ft. of natural gas a day.

Gold Makes a Return In Northwest Territories
Gold is giving diamonds a run for the money in the Territories. Steady, high gold prices above $400 US an ounce helped the Northwest Territories register the most active summer exploration season in a decade.

“Diamonds have been the darling of the exploration business for the last five years. But lately gold has come back,” said Mike Vaydik, general manager of the N.W.T. and Nunavut Chamber of Mines. “It’s a good time to be in the mining sector in the North.”

Besides the search for new deposits, surging prices have rekindled interest in former producing properties. For example, Tyhee Development Corp. has begun redevelopment north of Yellowknife at the Discovery Mine, which produced gold in the 1950s and 1960s. Seabridge Gold Inc. is exploring in the Courageous Lake area, site of the 1980s-era Salmita Mine.

In another development, Anaconda Gold Corp. and Doublestar Resources Ltd. are drilling at Damoti Lake, 180 km north of Yellowknife.

Tahera Teams Up With Tiffany
Tahera Diamond Corp. has moved closer to bringing Canada’s third diamond mine on stream through a deal struck with international jewelry giant Tiffany & Co. The latter will finance $35 million of the proposed $76.5-million Jericho Mine in the Northwest Territories. Tahera plans to raise the remaining capital on equity markets.

New Research Centre Will Focus on Tailings
A new Oil Sands Tailing Research Facility associated with the University of Alberta has opened at the Natural Resources Canada Research Centre, at Devon southwest of Edmonton.

The facility will investigate ways to dry and reduce the wet waste generated by bitumen mines in the Fort McMurray area. Dr. Dave Sego, P.Eng., of the geotechnical group within the U of A’s Department of Civil and Environmental Engineering, has been a driving force behind creation of the $2.2-million facility. It’s supported by university, industry, and federal and provincial funding.

According to Syncrude Canada President Jim Carter, P.Eng., processes expected to emerge from the new facility will speed the reclamation that follows mining.

Canada Aiming To Woo China On Wood Sales
China offers tremendous opportunities for Canadian forest products, says the president of the Canadian Council of Forest Industries. Paul Newman told the Alberta Forest Products Association annual conference that China produced 160 million cubic foot of wood in 2002. But, he said, that was still 108 million cubic feet shy of what it used.

Russia has been a traditional wood-products supplier to China. Canada, however, hopes a Canadian wood products development centre in China will increase its role, Mr. Newman said.

Meanwhile, another conference speaker, Craig Campbell of PricewaterhouseCoopers, cautioned that due to changes in B.C. forestry policies, Alberta may be losing the advantage it once had over its western neighbour.

Petro-Can Share Sale Pumps More Into Tank Than Ottawa Expected
Willing buyers helped channel $600 million more than the $2 billion the federal government had expected to gain from the sale of its remaining stake in Petro-Canada.

When Ottawa recently sold the 49.4 million shares it still held, at $64.50 each, it raised $3.2 billion. When book value and administrative costs were taken into account, that left $2.6 billion.

Though the federal government now has divested its financial stake, it intends to maintain a political interest by continuing to limit individual ownership in the former Crown corporation to 20 per cent.

TransCanada Buys U.S. Hydro Plants
TransCanada Corp. is paying $641 million Cdn to buy 41 hydro generating stations in the northeast United States.

The seller, USGen New England Inc., is insolvent and under Chapter 11 bankruptcy protection. TransCanada already owns or is building 4,700 megawatts of electrical generating capacity.

The generating system being acquired involves 13 dams and produces approximately 1.4 million megawatt-hours of electricity annually.

ATCO Power Trims Sails On Wind Power Project
ATCO Power is pulling out of a $250-million, 150-megawatt power farm development planned for the Rushlake Creek area of southwest Saskatchewan. The pullback leaves Saskatchewan’s provincially owned SaskPower alone to move ahead with or without other partners.

In other wind-power developments, plans are under way in Quebec to invest $1.9 billion to triple the size of that province’s wind-power sector. The Quebec government has announced eight wind farms with a total of 990 MW capacity. Cartier Wind Energy Inc., partly owned by TransCanada Corp., will build six of these facilities, slated for completion by 2012.

Meanwhile, Suncor Energy, Enbridge Inc. and Spanish-controlled EHN Wind Power Canada have proposed a 75-MW wind-power project near Ripley, Ont.

With just over 200 MW of installed wind-generating capacity, Alberta currently accounts for more than half of Canada’s 371 MW of wind energy.

Total Telecom Builds Fibre-optic Network For Lloydminster
Total Telecom Inc. has completed design engineering for a citywide fibre-optic network that it will build in Lloydminster. The 20-km network will link 28 government and public buildings in the city.

Devon Energy Puts Properties On the Block
Devon Energy Corp., which holds assets in Alberta, Saskatchewan and eastern British Columbia, has joined a parade of American oil companies selling off production properties in Canada.

Devon said it will use proceeds from the sale of oil and gas properties in the U.S., Canada and Gulf of Mexico to finance a share buyback. El Paso Corp., Calpine Corporation and Marathon Oil are among other U.S.-based companies that have sold off their Canadian assets.

Infrastructure Money On the Way for Municipalities
Calgary and Edmonton are each expected to receive $1 billion as part of a $3.3 billion provincially funded “catch-up” program for municipal infrastructure. Premier Ralph Klein indicated the spending program following a cabinet planning session in late September. The funds are expected to be channelled toward improvement and upgrading of municipal road, bridge and transit infrastructure.

Report Recommends Ways to Increase Diamond Demand
Exploration incentives, a competitive tax regime and faster approval of new mines are among the recommendations of a national diamond strategy prepared with provincial, but not federal, input.

Released by the governments of the Northwest Territories and Quebec, the report was prepared on behalf of all provinces and territories.

However, initial reaction indicated that the federal government would not be anxious to adopt the recommendation to drop the 10 per cent excise tax on diamonds as a means of spurring the industry and in order to make Canadian diamonds more cost-competitive at home and abroad.

Drilling Slumps In Soggy Summer
A wet summer has reduced activity by oil and gas drilling rigs, according to the Canadian Association of Oilwell Drilling Contractors.

The association placed the number of rigs active in late July at 486, a figure that had dropped to 349 by early September. Despite this slowdown but with drilling expected to pick up over the winter, the industry continues to face a shortage of rig workers, said Don Herring, the group’s president.

Shell Canada Plans Oilsands Expansion
Shell Canada Ltd. anticipates oilsands production to rise to 290,000 bbd from current levels of 155,000 bbd by the time a planned $4-billion expansion comes on stream in 2010.

Meanwhile, efficiencies and improvements over the next three years will raise daily output of the Muskeg River Mine and the associated Scotford Upgrader at Fort Saskatchewan by 180,000-to-200,000 bbd. Expansion of mining is expected to lead to peak construction employment of 2,500 in 2008. Additions to the Scotford Upgrader, including adding a third hydro-conversion unit, will employ a construction workforce of 4,000 at peak in 2008.

Refinery Retrofit To Cost $250 Million
Imperial Oil plans to spend $250 million for conversions at its Strathcona refinery near Edmonton to meet federal regulations requiring reduced sulphur emissions from diesel vehicles by mid-2006. The conversion, expected to take 18 months, follows a similar retrofit completed last year to permit low-sulphur-gasoline production at the same facility.

Tolko Upgrades High Level Plant
As part of a larger $150-million investment in its Alberta facilities, Tolko Industries will spend $35 million to upgrade its lumber mill at High Level.

The manufacturer and marketer of specialty forest products expects to take nine months to complete the improvements, which will increase fibre recovery, reduce waste and add to the value of each log handled at the High Level plant. The company is based in Vernon, B.C.