DOING SOME DIGGING – The dirt on oil sands

Canada's oil sands reserves are the envy of many energy-hungry nations, including the United States and China. Ther...
Canada's oil sands reserves are the envy of many energy-hungry nations, including the United States and China. There are trillions of barrels of oil locked up in these deposits, and this country is a reliable supplier.

Despite moderation of the oil price in recent months, activity in the oil sands patch is getting ever more hectic. A little research on the Internetthe CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS ( and the list of construction projects on the Government of Alberta's site listing statistics and publications ( a wish list that topped $70 billion.

First, a rundown of the mining projects, which together have price tags amounting to more than $32 billion.

The ATHABASCA OIL SANDS PROJECT (60% Shell, 20% Chevron and 20% Western Oil Sands) is expanding the Muskeg River mine by 2009 or 2010. Plus the Jackpine mine and its expansion is on the drawing board.

Construction at the Horizon mine of CANADIAN NATURAL RESOURCES is in progress, with initial production expected this year. There are three expansion phases that will carry the project through 2020.

DEER CREEK ENERGY has plans for a Joslyn open pit, but it is only at the disclosure stage now.

PETRO-CANADA (55%), UTS ENERGY (30%) and TECK COMINCO (15%) are readying their Fort Hills mine and upgrader for Phase 1 production in 2011.

SUNCOR's Voyageur project will probably get regulatory approval this year. The expansion of the Steepbank mine is slated for 2007-10.

SYNCRUDE anticipates the third train at its Aurora mine will reach production in 2010 and the fourth train in 2015.

SYNENCO ENERGY's Northern Lights mine is getting underway, and the start of construction is planned for 2008. Production should begin in 2010 and an expansion completed in 2012. SINOCANADA PETROLEUM holds a 40% interest in the project.

The other $40-billion-plus is to be spent at in situ bitumen recovery projects. Several types of in situ recovery are potential money-makers: SAGD (steam assisted gravity drainage using horizontal wells); CSS (cyclic steam stimulation using a vertical well); VAPEX (vapour recovery extraction using solvents rather than heat); THAI (toe-to-heel air injection, a patented and as-yet-unproven method); and primary or "cold" production (used where the bitumen will flow from reservoirs without the addition of heat or solvents). Getting in situ projects into production is faster and cheaper than building a mine and extraction plant. Therefore the popularity of such projects is gaining, leaving conventional mines in the minority.

Lest Alberta be the only province to benefit from oil sands production, OILSANDS QUEST is drilling in northwest Saskatchewan. Seven holes have been drilled, and six of them intersected bitumen-saturated material of the McMurray Formation. Eighteen more holes are planned this year.

Ah there's nothing like a strong commodity price to spur activity in a sector. I imagine expensive oil is here to stay.


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