More activity in the oil sands patch

We often think of Suncor, Syncrude, and now Albian as being the only players in the Athabasca oil sands patch (see pages 10-21 of this issue). Not true. They may be the largest and they may have huge open pits, but there are many more. These others also have an important role to play in expanding total oil sands production.

Petro-Canada is working on its in situ MacKay River development, 60 km northwest of Fort McMurray. Wells are being drilled in preparation for steam-assisted gravity drainage (SAGD) recovery at a rate of 30,000 bbl/day. The deposit contains an estimated 230 million to 300 million bbl of oil. The first oil from this $290-million project is expected by the end of this year. There are two more projects in the feasibility stage: The Meadow Creek property (45 km south of Fort McMurray) and the Lewis property (30 km northeast of the town). Both would use SAGD technology.

The Fort Hills leases, located 90 km north of Fort McMurray, are on their way to production in 2005. Initially, output will be at a rate of 95,000 bbl/day, but that will rise to 190,000 bbl/day in 2008. The project is 78%-owned and operated by True North Energy; the balance (22%) is owned by UTS Energy. Total development cost will be near $2 billion for a conventional truck and shovel mine plus associated oil sands treatment plant. An estimated 2.4 billion bbl of bitumen could be recovered over the next 30 years.

The Hangingstone project, about 50 km southwest of Fort McMurray, is operated by JACOS (Japan Canada Oil Sands). Production began in 1999 with SAGD technology. When the third phase comes on-stream, daily output will be 10,000 bbl of bitumen. JACOS has a 100% interest in leases containing about 20 billion bbl and an unspecified interest in other reserves containing 30 billion bbl.

Devon Canada Corp. owns the Jackfish project, about 100 km south of Fort McMurray. The leases can support a of 35,000 bbl/day SAGD project for 20 years, according to preliminary studies. If Devon completes its public consultations, environmental impact assessment, and engineering studies by the end of next year, then the bitumen could begin flowing as early as 2007.

Canadian Natural Resources Ltd. has $8 billion worth of plans for its Horizon project, 80 km north of Fort McMurray. CNRL hopes to have regulatory approval by the end of 2003. Horizon will be a truck and shovel mining operation with a slurry pipeline to an extraction plant, which sounds technically similar to Albian’s plant. However, CNRL will also build a two-stage upgrader at the site. If construction begins as planned in the fourth quarter of 2004, the Horizon operation would reach full production capacity of 230,000 bbl of upgraded crude per day by the end of 2011.