Canada: FMC’s Overview Of Significant Developments In The Canadian Energy Industry, December 2006

Last Updated: January 24 2007

Article by Doug Black, Bill Gilliland, Nick Kangles, Alex MacWilliam, Karim Mahmud, Miles Pittman, Rich Miller, John Hurley, Roxanna Benoit, Jerry Farrell & Ron Stuber

Alberta Oil Sands

Petro-Canada, on behalf of Fort Hills Energy L.P., has filed for permission to build the Sturgeon Upgrader for its Fort Hills oil sands project. Once completed, the upgrader will process up to 340,000 bpd of bitumen into 280,000 bpd of synthetic crude. (See number 1 on map)

Enbridge has received industry support for its proposed $1.3 billion Southern Lights diluent pipeline project. The project involves the development of a pipeline system to transport light hydrocarbon liquids from Chicago back to western Canada where they are required as diluent for heavy crude production from the oil sands. Pending regulatory approvals, Enbridge expects the project to be in service by 2010. (See number 2 on map)

Shell has filed a regulatory application to expand its Peace River oil sands project. As a result of the expansion, production from the in-situ project is expected to increase from the current 12,000 bpd of bitumen to 100,000 bpd of bitumen. (See number 3 on map)

A joint review panel established by the Alberta Energy and Utilities Board and the federal government has conditionally approved the expansion of the Athabasca Oil Sands Project. The project involves expansion of the Muskeg River oil sands mine, integrating it with Shell's Jackpine mine, and the construction and operation of a bitumen extraction plant. The project is a joint venture among Shell (60%), Chevron Canada Limited (20%) and Western Oil Sands L.P. (20%). (See number 1 on map)

The Federal Minister of Natural Resources stated that it is only a matter of time before Canada uses nuclear power to help extract oil from the oil sands. The minister estimates that 80% of Canada's production of oil will come from the oil sands by 2020 and nuclear power is the obvious way to produce the massive amounts of steam required to extract the oil.

West Coast News

In the latest update provided by the Canadian Association of Petroleum Producers, it is noted that British Columbia had an excellent year in terms of natural gas exploration, as new reserves booked replaced 309% of production. (See number 4 on map)

Canadian Arctic News

The Northwest Territories government remains optimistic for the prospects of the construction of the Mackenzie Valley Pipeline. The Minister of Industry, Tourisim and Investment observed that the approval process is moving forward at the National Energy Board and he remains hopeful that the pipeline, which would ship up to 1.9 bcfpd of natural gas, will be in operation some time after 2011. As well, negotiations with the Deh Cho First Nations communities are still in progress, and hearings before the Joint Review Panel will conclude earlier than previously anticipated. (See number 5 on map)

East Coast News

Foster Wheeler Canada have been awarded a contract by Canaport LNG Limited Partnership to provide project management consultancy services for its liquefied natural gas regasification terminal located in Saint John, New Brunswick. Canaport LNG LP is a partnership of Repsol YPF and Irving Oil. Foster Wheeler will also provide technical advisory services during the detailed engineering, procurement, construction, commissioning and start-up phases. The Canaport LNG LP terminal will have a send-out capacity of 1 bcfpd of natural gas upon its scheduled completion in late 2008.6(See number 6 on map)

Alternative Energy News

Cartier has begun commercial operations of its $164 million Baie-des-Sables wind farm located in the Regional County Municipalities of Matane and Mitis, Quebec. The wind farm consists of 73 turbines with a total installed capacity of nearly 110 megawatts, producing enough electricity to meet the needs of more than 21,000 households annually. Cartier is already working on its second wind farm at L'Anse-a-Valleau, which is expected to be in service in Fall 2007. (See number 7 on map)

The Manitoba government has committed to building the long dormant Conawapa Hydroelectric Dam project. The Conawapa dam will produce approximately 1,250 megawatts of clean energy from the Nelson River in northern Manitoba, and is expected to cost between $8 to $10 billion. A feasibility study indicates the dam could produce enough electricity to power approximately 600,000 homes annually (See number 8 on map).

SaskPower has chosen a site near Estevan, Saskatchewan to construct its new clean coal power plant. The plant will use carbon capture technology to operate enhanced oil recovery projects, and a new technology which results in easier purification of exhaust gases, to achieve recovery of nearly 95% of greenhouse gases. The project cost is estimated at approximately $1.5 billion and is being promoted by the Canadian Clean Power Coalition, which is also lobbying for support for a proposed clean coal project in Alberta. The Alberta project, which is in its early engineering stages, would be an integrated coal gasification and carbon dioxide capture scheme. The Alberta project would also carry an estimated cost of $1.5 billion and would be designed to produce 400 megawatts of power, 100 megawatts more than the Saskatchewan project. SaskPower expects construction on the Estevan plant to start in 2008 and be completed by 2011. (See number 9 on map)

The Canadian government has approved Hydro-Quebec's proposed $4 billion Eastmain 1-A hydroelectric project and Rupert River diversion in northern Quebec following the recommendation of the federal environmental assessment panel that reviewed the project. The federal government will work with the Province of Quebec, industry stakeholders and First Nations communities to finalize the regulatory process. The project includes the partial diversion of the Rupert River and the creation of diversion bays with a total area of 346 square kilometres. The annual output of the project is estimated at 8.5 terrawatt hours. (See number 10 on map)

On the Horizon

CNRL intends to file its regulatory and environmental impact assessment applications in the third quarter of 2007 for its proposed 30,000 bpd of bitumen Kirby SAGD project.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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