Investment Incentives driving Canadian oilsands activity

Canadian oilsands activity is heating up, with significant production reported at one complex and plans disclosed for new plants and investment. Syncrude Canada Ltd. reports its oilsands plant at Fort McMurray, Alta., shipped 17.4 million bbl of sweet blend crude, averaging 193,000 b/d in first quarter 1997. Shipments for the period were the second-highest in the company's history, just below 18.1 million bbl shipped in first quarter 1996. Syncrude expects to ship more than 76 million bbl

June 9, 1997

2 min read

Canadian oilsands activity is heating up, with significant production reported at one complex and plans disclosed for new plants and investment.

Syncrude Canada Ltd. reports its oilsands plant at Fort McMurray, Alta., shipped 17.4 million bbl of sweet blend crude, averaging 193,000 b/d in first quarter 1997. Shipments for the period were the second-highest in the company's history, just below 18.1 million bbl shipped in first quarter 1996.

Syncrude expects to ship more than 76 million bbl of synthetic crude in 1997.

The increased oilsands investment is being driven by improved federal investment incentives and a reduction in production costs during the past 5 years to about $13/bbl.

Incentives for heavy oil investment in Saskatchewan could produce up to $100 million in new investment, the Saskatchewan government says.

Ottawa will extend incentives now granted to Alberta oilsands projects to some Saskatchewan heavy oil developments. Changes include expanding the definition of bituminous sands for tax purposes, which should produce accelerated tax deductions for some projects.

More plants

Mobil envisions a $1 billion (Canadian) oilsands plant in northern Alberta, aiming to produce 100,000 b/d by 2003.

The mining and extraction plant in the Fort McMurray region at Kearl Lake, if built, would be the fourth major oilsands project in Alberta and is part of a broader oilsands expansion.

Mobil has owned the Kearl Lake property for 40 years. Mobil said a final decision on the project will be made in 2000. It said the project is being announced now to allow time for the regulatory process and public consultation.

Shell Canada Ltd., Calgary, recently announced plans for a $1 billion plant to produce 120,000 b/d of synthetic oil by 2002.

And both the existing Syncrude and Suncor Inc. plants have announced expansion programs. Syncrude is spending $2.1 billion developing a new oilsands mine to increase its production to 257,000 b/d from 200,000 b/d by 2005.

Suncor is spending about $800 million for a new mining operation to increase production to 105,000 b/d from a current 78,000 b/d by 2000.

Meanwhile, Norway's Norsk Hydro, which recently opened a Calgary office, said it's also interested in oilsands and heavy oil projects. The company said the Canadian Arctic and huge heavy oil reserves in western Canada are potential sites for future expansion of operations.