For decades, one sector of the oilsands industry has occupied its spotlight, albeit a very dim one until recent years, and that is the world of bitumen mining—giant equipment moving vast volumes of material in order to squeeze oil from dirt in a carefully orchestrated 24/7 symphony.
By the resource numbers, it has long been undeniable that the future of oilsands development will be through drilling rather than surface mining, but only recently has this really begun to show in a business sense.
A number of Alberta’s oilsands producers are looking ahead to improved reliability and increased production volumes as they put both scheduled and unplanned maintenance behind them. Others are commissioning expansions or enjoying the fruits of those recently completed, all while benefiting from relatively robust crude oil prices. Here are the operational and financial results of key producers in the first quarter of 2010.
They call it the wall of cash flow. The idea is that once an oilsands operation is up and running, its owners see a near-constant flow of barrels and profits. For in situ producers that liquid wall must constantly move through a barrier—one that lets oil in but keeps sand out. After all, it wouldn’t be oilsand without the sand, the management of which is a challenge that successful firms that produce bitumen from wells have proven is well worth the effort.
Reduced costs, faster drilling time, and more accurate well placement—that is what Statoil and Halliburton say they achieved in drilling the steam assisted gravity drainage (SAGD) well pairs for the Leismer demonstration project, drilling that was completed in December 2009. The two companies did this through what they call a series of firsts in SAGD drilling, and a clear mandate from Statoil. “We basically asked them to drill the wells on plan with no margin of error,” Statoil’s Chad Zimmer told the audience at the recent Canadian Association of Drilling Engineers/Canadian Association of Oilwell Drilling Contractors annual conference. “That encouraged everyone to perform at the peak of their game.”
Statoil is a new player in the oilsands business, having bought in with the acquisition of junior North American Oil Sands in 2007. Leismer is its inaugural project, the demonstration stage of a phased installation called Kai Kos Dehseh, which for the local Chipewyan Prairie Dene First Nation means “Red Willow River.”
Within the profound resource base available to in situ oilsands producers, in a sector dominated by major operators, continues to lie a wealth of opportunity for a junior player with the right strategy and experience. That is the conviction of a number of firms including Grizzly Oil Sands, which recently solidified its presence in the industry by submitting the application for its Algar Lake steam assisted gravity drainage (SAGD) project.
Janelle Wassink
“This is absolutely a great day for the oilsands.”
— Entrepreneur Kevin O’Leary on the proposed investment of China Investment Corporation into Penn West Energy’s oilsands projects—offering access to world markets for the capital. The Lang and O’Leary Exchange, CBC Newsworld, May 13.
Scott Bolton is a partner with PricewaterhouseCoopers and leads the Canadian energy practice. For the past 25 years he has focused on the energy and utilities sector, providing a range of services including transaction support, internal auditing, and performance improvement. Currently, he is a senior partner in the firm’s performance-improvement practice. His team has just completed a series of discussions with top oilsands company executives and government officials and put together an under-the-hood look at some of the issues facing the oilsands industry.
People living in communities near oilsands development can breathe easy—that’s the perhaps-oversimplified assertion made recently in announcing the results of a study conducted by the University of Alberta. The Wood Buffalo Environmental Association Ambient Air Quality Data Summary and Trend Analysis, released in April, examined how, and if, air quality is being affected in the three communities closest to oilsands activity in the Athabasca region: Fort McMurray, Fort McKay, and Fort Chipewyan. The results indicate that despite ongoing development, there is little or no pattern to the changes in concentrations of various air pollutants across the region during the past 10 years. Lead researcher Warren Kindzierski says people living in these three communities should feel confident that the air they are breathing is safe—but you can be sure some critics are still holding their breath.
My heart goes out to the families of the people who died in the tragic explosion in the Gulf of Mexico on April 20, and to all the people whose livelihoods and homes will be impacted by the oil spill. I hope we will find out what happened and new procedures will be implemented to mitigate future incidents. At the same time that this has been going on, Syncrude is facing a major lawsuit about the death of hundreds of ducks on one of its tailings ponds that may have major repercussions on the development of the oilsands.
