Oil Sands News
1. CNRL announced that it has submitted regulatory applications for a $1.53 billion in‐situ oil sands project. Development of the 50,000 bpd Grouse facility would include 191 well pairs from 36 surface well pads, as well as a central processing facility, utilities and associated infrastructure. Construction could begin as early as the first quarter of 2015, with initial steam by the end of 2017 and first production in the first quarter of 2018. Operations at the facility are expected to continue through 2036.
1. MEG Energy announced a pilot project at its Christina Lake facility following a successful oil sands pilot in March which yielded a steam to oil ratio of 1.8, about 40% lower than the industry average. Following the successful pilot, the new project will utilize the same technique of injecting non‐condensable gas into three SAGD well pairs in the Phase 1 area of Christina Lake, which process is designed to replace steam with recyclable gas in order to maintain reservoir pressure. According to the company, the use of non‐condensable gas at the initial pilot freed up system requirements by about 25% with no drop in production.
East Coast News
2. Shoal, a petroleum exploration and development company based in Ontario, Canada, reported its resource evaluation for exploration licenses 1070, 1120 and 1097R, offshore western Newfoundland early this month. The company published that up to 49.4 billion bbls of oil (undiscovered petroleum initially‐in‐place) exists in the Green Point shale play offshore western Newfoundland.
2. The government of Newfoundland and Labrador is providing up to $500,000 to businessled research and development projects relating to topics including: concept engineering, model testing, and prototype development through to field trials and demonstration projects. The funding will be deployed through the Research & Development Corporation's ArcticTECH program. The new program is a three year initiative, allocating $5,000,000 towards strengthening Arctic‐related research and development capacity in the province. The research grants will target start‐ups, technology companies and the development of new Arctic research tools and equipment with commercialization potential.
West Coast News
3. Canada's largest transporter of Canadian oil exports announced a $3.2 billion suite of projects intended to move crude from western Canada to eastern refineries and reduce bottlenecks in the US Midwest. As part of the planned projects, Enbridge will expand the Canadian portion of the Alberta Clipper pipeline by adding enough horsepower to increase Canadian mainline capacity by 120,000 bpd. Subject to National Energy Board and shipper approval, the expansion is slated to be in service by mid‐2014.
4. Shell Canada Limited, along with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited are jointly developing a proposed liquefied natural gas (LNG) export facility to be located near Kitimat, British Columbia. The estimated $12 billion LNG Canada project will include the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of LNG, including marine off‐loading facilities and shipping. The liquefaction plant will initially include two LNG processing trains capable of producing 6 million tonnes of LNG annually, which equates to roughly 2 bcfpd. Shell owns 40% of the proposed project, with each of Korea Gas, Mitsubishi and PetroChina holding a 20% stake. The regulatory process is expected to commence later this year with the filing of the project description, and the project is anticipated to start up near the end of the decade.
Canadian Arctic News
5. The Canadian government is moving forward to promote greater development in the Canadian Arctic. Ottawa has offered 905,000 hectares of the northern offshore for bid, encouraging energy companies to secure exploration rights to what the spokesperson for the Minister of Aboriginal Affairs and Northern Development Canada claims as world‐class natural resources with tremendous economic growth potential. The magnitude of the offering demonstrates the eagerness in the oil patch to return to the north and drill for new finds in Canada's Arctic waters.
6. 7. Alterra, a leading global renewable energy company, signed a deal to buy four wind power projects from a group of sellers, including English Bay Energy. Three of the four projects are in their early stages and are located on the north coast of BC on Banks Island, Porcher Island and McCauley Island. The fourth project is located on northern Vancouver Island. Under the terms of the sale agreement, the sellers will receive royalty payments during the operations phase of the projects, and up to 1.34 million Alterra shares under specific conditions.
On the Horizon
CIBC World Markets anticipates that oil sands production is likely to outpace current industry projections in the near term, and predicts that production will meet or exceed pipeline capacity by 2015 or 2016. By 2020, oil sands production from northern Alberta is expected to increase by 2 million to 2.5 mmbpd, more than doubling the 1.6 mmbpd of output from last year. That estimate, which equates to an increase of approximately 220,000 to 270,000 bpd each year, far exceeds the last report from the Canadian Association of Petroleum Producers (CAPP), which anticipated an increase of only 1.4 mmbpd by 2020. According to CIBC, overall mining and steam‐driven oil sands production could reach 4.1 mmbpd by the end of the decade, which estimate is nearly 40% higher than anticipated by CAPP. CAPP is expected to release its 2012 forecast in the coming weeks.
In this newsletter, all dollar amounts are Canadian dollars unless otherwise stated. We have also used the following abbreviations: bpd ‐ barrels per day; boepd ‐ barrels of oil equivalent 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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