Oil sands operators seek project permits

By OGJ editors
HOUSTON, Mar. 30 -- Despite a slowdown in activity in Alberta's oil sands, operators this month have taken early regulatory steps toward several future projects.

In response to slumping crude oil prices, companies recently have delayed or shelved plans to expand production or build bitumen upgraders (OGJ, Mar. 2, 2009, p. 20). But applications filed with Environment Alberta, the province's environmental permitting authority, show continuing long-term interest in expanding output of bitumen and heavy crude. Under the new applications:

• The partnership of Encana Corp. and ConocoPhillips seeks to expand output of its Christina Lake in situ project, 20 km east of Conklin, to 218,800 b/d from 98,800 b/d.

• Athabasca Oil Sands Corp. proposes to produce an initial 50,000 b/d at its MacKay River steam-assisted gravity drainage (SAGD) project 28 km west of Fort McMurray, with expansion possible to 150,000 b/d.

• Connacher Oil & Gas Ltd. seeks permission for its Great Divide SAGD expansion project, which encompasses two Great Divide projects: Pod One near Mariana Lake and the nearby Algar. Pod One went on stream in September 2007 and is ramping up to its initial capacity of 10,000 b/d. Algar, with equivalent initial capacity, isn't yet producing. The expansion project would raise combined capacities to 44,000 b/d.

• OSUM Oil Sands Corp. proposes to use SAGD and cyclic steam stimulation to develop 35,000 b/d of production capacity at its Taiga project 20 km north of Cold Lake.

Also in March, Alberta Energy reached agreement with Fort Hills Energy Corp. under which the partnership, led by Petro-Canada, committed to increasing upgrading capacity in Alberta in exchange for extension to July 31, 2019, of its leasehold in two oil sands mining areas 90 km north of Fort McMurray.

Fort Hills sought a lease extension last year when it temporarily suspended a decision on funding of its integrated mining and Sturgeon County upgrader project.

Under the new agreement, the partnership must add upgrading capacity in Alberta or upgrade in Alberta bitumen produced from its second-phase mine. If it fails to do so, it must reimburse Alberta as much as $500 million.

It may build its own upgrader or invest in or secure access to new or underutilized upgrading capacity owned by others in Alberta.

The project's initial capacity is 140,000 b/d of synthetic crude, with expansion to as much as 280,000 b/d.

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