Ivanhoe halts Tamarack oil sands project citing lack of regulatory ‘clarity’

Ivanhoe Energy Inc. has suspended activity on its Tamarack oil sands project pending approval for its thermal oil sands application from the government of Alberta.

The company said its decision is based on the uncertainty that there is no timeline defined by the Alberta Energy Regulator (AER) for a new regulatory framework for shallow steam-assisted gravity drainage (SAGD) projects, and the lack of clarity regarding a path for approval for its Tamarack application.

In November 2010, Ivanhoe submitted the application, which involves two 20,000 b/d phases for an eventual production of 40,000 b/d of bitumen. At the time, the company anticipated production from the first phase toward yearend 2013 (OGJ Online, Nov. 8, 2010).

Ivanhoe said it will limit Tamarack spending to only essential items until there is greater regulatory certainty as to a path to approval.

The company believes its application, as submitted, adheres to best practices for safe reservoir development, and is now evaluating novel and advanced technologies that could potentially result in early production from the project.

Ivanhoe estimates that the regulatory uncertainty affects as much as 1 million b/d of future shallow SAGD projects held by various resource owners—a significant percentage of the overall oil sands production growth, as forecasted by the Canadian Association of Petroleum Producers.

Ivanhoe is working with other affected resource owners and the AER to support the early issuance of a long-term policy for shallow SAGD projects.

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