Oil Sands News
1. Imperial remains committed to commencing production on the initial 110,000 bpd phase at its Kearl oil sands facility by the end of 2012. The company reported that the overall facility was 89% complete as of the end of February, with the initial haul truck fleet, both electric mine shovels and the hydraulic shovel ready for operation. The company anticipates building the initial ore stockpile and advancing overburden removal within three months. The expansion project at Kearl will add 110,000 bpd of bitumen by 2015, and is expected to yield 345,000 bpd by 2020. When complete, Kearl will be the only oil sands operation without an upgrader, which is made possible by proprietary paraffinic froth treatment technology that produces diluted bitumen which meets pipeline and refinery standards.
1. In light of future projects and plans for its Hangingstone in situ oil sands project, Athabasca Oil Sands Corp. announced that it will be implementing what it calls "production insurance", a pre-investment program that will involve drilling extra well pairs and providing excess steam capacity earlier in the development of the facility. As a result, the company expects to achieve cumulative steam-to-oil ratios closer to 3.0-3.2, rather than the 3.5 for which the project was designed. Following regulatory approval, internal sanction and the commencement of construction, all of which are expected later this year, the company anticipates first production from the 12,000 bpd project in 2014.
1. Pengrowth and NAL Energy Corporation have entered into an arrangement agreement that will see NAL shareholders receive 0.86 Pengrowth shares for every NAL share. Subject to regulatory and shareholder approvals, the combination of the two companies will boast an expanded asset base of more than 100,000 boepd of current production and 434 million boe proved plus probable reserves. The proposed transaction will also provide increased access to capital for Pengrowth's Lindbergh SAGD oil sands project, which is currently injecting steam as part of a 1,000 bpd pilot project and is estimated to contain 783 mmbbl of bitumen initially in place. The meetings of the respective shareholders of NAL and Pengrowth will to take place late next month in anticipation of a May 31 closing.
East Coast News
2. Canaport, a liquid natural gas (LNG) receiving and regasification terminal in Saint John, New Brunswick, announced plans to expand its import terminal for a cost of $43 million. Repsol YPF, an integrated Spanish oil and gas company, owns majority share in and manages Canaport. The expansion is aimed at reducing fugitive emissions from the terminal in order to become more efficient and to decrease its environmental footprint.
3. NWest, a Canadian based resource company, has completed a significant sale of a 100% undivided working interest in an exploration licence granting exploration rights to approximately 500,000 acres located offshore of western Newfoundland and Labrador. Shoal Point Energy, a Canadian petroleum exploration and development company, acquired the licence and now has rights in approximately 720,000 gross acres in the western Newfoundland offshore.
West Coast News
4. Kinder Morgan announced that it has entered into a long-term contract to support the construction of an additional 1.2 mmbbl of merchant storage capacity at Trans Mountain Pipeline's Edmonton terminal. Following on the heels of definitive agreements for 2.4 mmbbl of storage at the facility, the overall value of the 3.6 mmbbl expansion project has now reached approximately $284 million. This latest expansion is expected to be operational in late 2013, and the company is currently in discussions with other producers for a further increase to 6 mmbbl of total storage capacity at the facility.
5. AltaGas anticipates bringing $1.8 billion in new assets online this year and expects to deliver strong results as producers look to increase netbacks from liquids-rich gas. In addition to expansions at other field processing and extraction facilities, the company expects to benefit from the completion of the 120 mmcf per day Gordondale gas plant, as well as the Harmattan co-stream project, which will utilize 250 mmcf per day of spare capacity to recover ethane and other natural gas liquids received from the NOVA Gas Transmission western system. Each of the Harmattan and Gordondale projects are supported by long-term contracts and are expected to be operational later in the year.
Canadian Arctic News
6. Canol oil shale in the Central Mackenzie Valley of the Northwest Territories has been called potential "game changer" for oil and gas development in northern Canada. The Canol shale is about 375 million years old and was first discovered in 1920 at Norman Wells, which has already produced more than 300,000 bbls of oil. A significant amount of oil is remaining in the Canol shale, according to John Hogg, Vice- President of Operations and Exploration for MGM Energy. More than $500 million in work commitments has been paid by MGM Energy, together with five other oil and gas companies, for a total of 11 parcels in the Northwest Territories to date.
7. Finavera Wind, a Vancouver-based wind energy developer, received final environmental approval for a 49.6MW wind project in British Columbia. The Tumbler Ridge project will cost Finavera C$125 million and will operate under a 25-year power purchase agreement with BC Hydro.
8. Ontario's renewable energy plan was announced by the provincial government on March 22, 2012 when it published the results of the scheduled two-year Feed-in-Tariff (FIT) program review. The proposed changes to the FIT program include strengthening renewable energy targets by moving up the province's target date for 10,700 MW of non-hydro renewable energy from 2018 to 2015. Over the years, Ontario's FIT program has attracted more than $27 billion in private sector investment and economic opportunities within the province. For more information on the Feed-In Tariff program two-year review report, please visit: http://www.energy.gov.on.ca/en/fit‐and-microfit‐program/2‐year‐fit‐review/.
On the Horizon
Following the expansion at its Kearl facility, Imperial is planning to add two more projects as the company moves toward its goal of doubling production to 600,000 boepd by 2020. Subject to regulatory approval, Imperial intends to develop the Grand Rapids formation at Cold Lake in multiple 35,000 bpd phases, producing bitumen using steam-assisted gravity drainage (SAGD) or solvent-assisted SAGD, a technology currently being piloted at Cold Lake. The Aspen project, near the Kearl mine, is 100% owned by Imperial and lends itself to SAGD production. Following regulatory approval, Imperial expects that Aspen will be capable of 80,000 bpd production by the end of the decade.
In this newsletter, all dollar amounts are Canadian dollars unless otherwise stated. We have also used the following abbreviations: bpd - barrels per day; mmcfpd - million cubic feet per day; bcfpd - billion cubic feet per day; tcf - trillion cubic feet; bbl - barrel; mbbl - thousand barrels; mmbbl - million barrels; bbbl - billion barrels; boe - barrels of oil equivalent; MW - megawatts; kV - kilovolt; km - kilometer; KW - kilowatts; KWh - kilowatt hours; cmpd - cubic meters per day; GJ - gigajoule.
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