Oil has been produced from Canadian oil sands since 1967 with the start-up of Suncor, followed by Syncrude in 1978 and Albian Sands Energy’s Muskeg River mine in 2003. But the push to build more oil sands capacity, through either mining or in situ recovery, has been driven in recent years by the fact that most of North American’s crude oil producing areas are “maturing” (read “running low on cheaply recoverable reserves”). The energy companies see the three oil sands deposits in northern Alberta and western Saskatchewan as critical to supplying Canada’s petroleum needs in the future.
With recovery costs coming down and the price of crude oil soaring, the money is pouring into expansions and new operations in the Fort McMurray, Alta., area. Estimated spending on projects over the next 10 years ranges from $38 to $60 billion. A recent article by Tom Maloney (“The Next Saudi Arabia”, Saturday Night, summer 2005) vividly describes how this growth is squeezing the resources of the small northern city.
About a third of the oil sands production is from in situ operations, with heat or solvents used to remove bitumen from the otherwise-intact underground oil sand formations. This is quite different from mining (the other two-thirds), where the overburden is stripped, and the sands are removed, crushed and processed to extract bitumen. When Horizon begins operation in 2008, it will join several other mines already operating or in development in the Athabasca deposit. Some of them are summarized below, based on the spring 2005 Oil Sands Industry Update prepared by Alberta Economic Development.
Suncor Energy Inc.
* Steepbank and Millennium mines and Firebag in-situ project produced 226,000 bbl/d bitumen in 2004
* fire in February 2005 disrupted prod’n; expected to return to full prod’n Q3 2005
* applied with Alberta regulators in March 2005 for $7-billion Voyageur project to expand Steepbank mine and build a third upgrader, to boost output to 500,000-550,000 bbl/d by 2010-12. This will include building and operating a proposed South Tailings Pond for the Millennium mine.
Syncrude Canada Ltd.
(a joint venture of Cdn Oil Sands L.P., Cdn Oil Sands Ltd., Imperial Oil Res., Mocal Energy Ltd., Nexen Energy Inc., Murphy Oil Co. Ltd., Petro-Canada & Conoco Phillips Oilsands Partnership)
* North mine and Aurora mine trains 1&2 produced 238,000 bbl/d bitumen in 2004
* currently in $7.9-billion stage 3 of Syncrude 21 growth strategy including upgrader expansion, increasing production to 350,000 bbl/d by 2006
Albian Sands Energy Inc.
(a joint venture of 60% Shell Canada Ltd., 20% Chevron Canada Ltd., 20% Western Oil Sands L.P.)
* Muskeg River mine with Shell Scotford Upgrader and Corridor Pipeline produced 135,542 bbl/d bitumen in 2004; design capacity is 155,000 bbl/d
* Athabasca Oil Sands project (submitted for regulatory approval in April 2005) includes debottlenecking and expansions at the mine and upgrader to achieve prod’n of 270,000-290,000 bbl/d by 2009/2010; Phase 1 and 2 of the Jackpine mine (approved in 2004) to be built at a capacity of 300,000 bbl/d by 2015. Cost estimates will be made public in 2006.
* total bitumen prod’n could be 500,000-600,000 bbl/d by 2014-2015
(purchasing 60% interest from UTS Energy Corp.)
* regulatory approval obtained by former owner TrueNorth Energy for 190,000 bbl/d bitumen prod’n
* various plans being considered for developing Fort Hills mine and upgrader, including 50,000-bbl/d mine by 2009 and upgrader by 2011, or 100,000-bbl/d mine and upgrader by 2010
* extraction process demo plant under construction, to produce 3,500 bbl/d bitumen froth
* plans announced in 2002 for seeking approval of the $4-5-billion Northern Lights integrated mine and upgrading facility with a design capacity of 100,000 bbl/d bitumen
* start-up targeted for 2007, with peak production in 2010
* environmental impact assessment report to be filed in 2005
Imperial Oil Resources
(a joint venture with ExxonMobil)
* company applied in July 2005 for regulatory approval for the $4.5-$6.5-billion Kearl mine project (no upgrader)
* initial rate of 100,000 bbl/d, later to be expanded to 300,000 bbl/d bitumen
* if approved, construction planned for 2007-2018, with first prod’n in 2010
* currently conducting environmental impact assessment
Deer Creek Energy
* company disclosed plans for two-phase development of 100,000-bbl/d mining component of Joslyn in-situ oil sands project
* intends to apply for regulatory approval in late 2005 or early 2006
* if approved, construction expected to start in 2008, and production in 2011
Fort McKay First Nation
* band has publicly discussed plans for 35,000-bbl/d oil sands mine near Fort McKay settlement
* timing uncertain