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Alberta oilsands world's largest source of new crude oil by 2010: CIBC

Last Updated Tue, 10 Jan 2006 18:48:49 EST

CBC News

Alberta's oilsands will become the most important source of new oil in the world by 2010 as conventional crude dries up, CIBC World Markets says in its monthly report.

Alberta will sit on one of the most valuable energy sources in the world by that time, and one of the few still open to private investment, said Jeff Rubin, chief economist at CIBC World Markets, the bank's wholesale banking arm.

He added that conventional oil production around the world apparently peaked in 2004.

Rubin found total world oil supplies grew by less than one million barrels a day last year. None of that growth came from outside the OPEC sphere.

That finding was particularly surprising because oil prices have doubled in recent years, making exploration of many new areas economically feasible for the first time.

Rubin looked at 164 upcoming oilfields in his study and found that new oil is, in fact, being discovered and coming on stream. But more than half simply balances declining production from existing fields in the North Sea and Kuwait's Burgan region.

Rubin does expect a net gain in oil production in coming years, but it will be small and getting smaller.

Rubin expects 3.6 million barrels of new oil to come on stream in 2006, but 2.2 million barrels will go to replace declining reserves elsewhere, leaving just 1.4 million barrels of new oil.

He expects 1.5 million barrels of new oil in 2006 and 2007, but less than a million barrels a day in 2008.

Energy companies are finding new oil, but most of it will come from non-conventional sources. Ocean oil rigs are the primary source of new oil today. Alberta's oilsands will rival Saudi oilfields once expansion projects are underway.

Suncor Energy Inc. and its predecessor, Great Canadian Oil Sands, have been developing the oilsands near Fort McMurray in northern Alberta since 1963. But the project was hobbled by the difficulties and expense of extracting crude oil from what is essentially an oily sand.

Forty years later, production has risen to about 270,000 barrels a day, with plans to expand to more than half a million barrels a day by 2012.

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Kolla

Very interesting article Pierre, thanks for posting.

I just returned a few days ago from a 1 500 km round trip through north eastern Alberta and saw places like Lloydminster (on the Sask border), Cold Lake and Bonnyville. Its mostly smaller rural communities but I could see huge developments in the oil and gas industry up there too. Lots of economic activity and wealth you see everywhere. Business is booming. The oil and gas here has a huge impact even in the small towns. For the first time I really now saw how big it is in Alberta.

In Stettler they had this huge 2/3 storey high chopped off live Xmas tree planted right in the middle of an intersection at a set of lights, hanged with lots of decorations and Xmas presents. I really had to look twice, never before saw something like that, right in the middle of a busy street. Perhaps only in rural Alberta you will see such an amazing thing !

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Pierre

On one of my round trips I also visited Cold Lake. It reminded me much of a small town next to the Vaal Dam.

I have an expedition planned to Fort Chipewyan in the north for mid February. The ice road is still a bit tricky at this stage, but cold weather is expected and then it will allow traffic over the ice bridges. We've only been there once before. This time we're taking some Canadians along, in convoy, who have not gone there before.

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Pierre

ACTUAL TRANSCRIPT FROM 60 MINUTES - CBS

The Oil Sands Of Alberta

Jan. 22, 2006

(CBS) There’s an oil boom going on right now. Not in Saudi Arabia or Kuwait or any of those places, but 600 miles north of Montana.

In Alberta, Canada, in a town called Fort McMurray where, this time of year, the temperature sometimes zooms up to zero.

The oilmen up there aren’t digging holes in the sand and hoping for a spout. They’re digging up dirt — dirt that is saturated with oil. They’re called oil sands, and if you’ve never heard of them then you’re in for a big surprise because the reserves are so vast in the province of Alberta that they will help solve America’s energy needs for the next century.

Within a few years, the oil sands are likely to become more important to the United States than all the oil that comes to us from Saudi Arabia.

Correspondent Bob Simon reports.

Twenty-four hours a day, 365 days a year, vehicles that look like prehistoric beasts move across an arctic wasteland, extracting the oil sands. There is so much to scoop, so much money to be made.

There are 175 billion barrels of proven oil reserves here. That’s second to Saudi Arabia’s 260 billion but it’s only what companies can get with today’s technology. The estimate of how many more barrels of oil are buried deeper underground is staggering.

"We know there’s much, much more there. The total estimates could be two trillion or even higher," says Clive Mather, Shell's Canada chief. "This is a very, very big resource."

Very big? That’s eight times the amount of reserves in Saudi Arabia. The oil sands are buried under forests in Alberta that are the size of Florida. The oil here doesn’t come gushing out of the sand the way it does in the Middle East. The oil is in the sand. It has to be dug up and processed.

Rick George, the Colorado-born CEO of Suncor Energy, took 60 Minutes into his strip mine for a tour. He says the mine will be in operation for about 25 years.

The oil sands look like a very rich, pliable kind of topsoil. Why doesn’t oil come out when squeezed?

"Well, because it’s not warm enough. If you add this to hot water you’ll start the separation process and you’ll see the oil come to the top of the water and you’ll see sand drop to the bottom," George says.

It may look like topsoil but all it grows is money.

It didn’t always. The oil sands have been in the ground for millions of years, but for decades, prospectors lost millions of dollars trying to squeeze the oil out of the sand. It simply cost too much.

T. Boone Pickens, a legendary Texas oil tycoon, was working Alberta’s traditional oil rigs back in the '60s and remembers how he and his colleagues thought mining for oil sands was a joke.

"Here we are sitting there having a drink after work and somebody said this isn’t going to, it isn’t possible. It’ll all have to be subsidized to a level, said, before they’d make money you’d have to have $5 oil," Pickens says laughing. "We never thought it would happen."

But then $40 a barrel happened and the oil sands not only made sense, they made billions for the people digging them. But it wasn’t just the price of oil that changed the landscape, it was the toys. That’s what they call the giant trucks and shovels that roam the mines.

Everything about the oil industry has always been big. It’s characterized by bigness, from the pumps to the personalities. But up here in Alberta, it’s frankly ridiculous. The mine operates the world's biggest truck. It’s three stories high and costs $5 million. It carries a load of 400 tons of oil sands, which means, at today’s oil prices, each load is worth $10,000 dollars.

What it’s like to drive one of these monsters? At the foot of a tire, we asked the driver, Jim Locke.

"You have 14 steps going up, and at my house you have 14 steps to the bedroom. So it’s like going upstairs in my house, sitting on my bed and driving the house downtown," says Locke.

But getting downtown is just the beginning. The oil sands then go into a plant. They’re heated in a cell, which separates the oil from the sand. The result looks like something out of Willy Wonka’s chocolate factory. This oil froth is then sent to an upgrader and eventually to a refinery.

Asked if the processed oil is as good as that pumped in Saudi Arabia, Mather says, "Absolutely as good as. In fact, it even trades as a, at a premium because it’s high quality crude oil."

The capital of the oil sands frenzy is a frontier town called Fort McMurray, which isn’t in the middle of nowhere. It’s north of nowhere and colder than the Klondike, but a boomtown just the same. The local hockey team is called the "Oil Barons." They’re on a winning streak.

Is this comparable to a gold rush?

"I think it’s bigger than a gold rush. We’re expecting $100 billion over the next 10 years to be invested in this area — $100 billion in a population that, currently, is 70,000 people," says Brian Jean, who represents the region in Canada’s parliament.

Pickens is one of those investors. He runs a hedge fund in Dallas and is now a true believer.

"We’re managing $5 billion here. And, about 10 percent of it is in the oil sands. So, it’s the largest single investment we have," Pickens says.

And if oil sands are the answer for investors, does Pickens think the oil sands are the answer for the United States?

"Oh, I think so," he says.

Most of those lumbering trucks are on their way to the gas tanks of America. A million barrels a day are now coming out of the oil sands and oil production is expected to triple within a decade. It won’t replace Middle Eastern oil but at that point it will be the single largest source of foreign oil for the United States, even bigger than Saudi Arabia, which sends a million and a half barrels a day to America.

Greg Stringham, who works for the Canadian Association of Petroleum Producers, says surprisingly, that Washington has only been paying attention for the "last couple of years."

Stringham often lobbies for the oil sands in Washington. He says that in Alberta you don’t have to look for the oil sands — the earth moves.

"When it comes to exploration in the oil sands, you can’t drill a dry hole. It’s there," he says. "We know where it is. They’ve outlined it. You don’t have any risk. But other conventional sectors around the world, there’s a huge exploration risk."

The exploration risks are the least of it. Much of the world’s crude is in the Middle East where the instability is deeper than the oil. When Alberta’s blue-eyed sheiks took to Wall Street last summer in their Stetsons to drum up support for the oil sands, their message seemed to be, "If you can’t trust Alberta, who can you trust?"

"Alberta is a very good place to do business. It’s a very stable environment," says Mather.

The bonus for Canadians, aside from the treasure, is the notion that Americans might have to start treating them with a little less condescension.

"With their oil, I think we’re going to need them a lot more than they need us," says Pickens.

"We may appear in Canada to be a mouse compared to the elephant down south in terms of diplomacy or politics. But in terms of resources, we are mighty equals," says Mather.

There have been grumblings out of Ottawa that Canada should consider using the oil sands as leverage in its serious trade disputes with the United States.

Does Brian Jean think America is taking Canada for granted on the oil sands?

"Absolutely. And I think most people, most Canadians believe that," he says.

And the Canadians have alternatives. The Chinese, for example, are just dying to get a piece of the sandbox.

"I’ve been contacted personally by Chinese delegates that want to get into the plant sites here and want to see and want to invest," says Jean.

Asked what he thinks about the Chinese interest in the oil sands up in Alberta, Pickens says, "At first I thought they were tire kickers. But I think they’re serious buyers."

And the millions of Chinese who have moved from their bicycles to traffic jams are driving up the demand for oil. It’s virtually insatiable and the Canadians want to step up production quickly. What’s holding them back is labor — the shortage of it.

Brian Jean says another 100,000 people are needed in Fort McMurray.

That’s why one oil company has built a runway to fly workers daily from civilization to Fort McMurray. But why would anyone want to come work in a place where temperatures plummet to 40 below and the sun sets shortly after it rises in the long winter? Well, perhaps because the oil companies pay some of the highest salaries in North America.

Take Josh Lichti, who says he could be making $120,000 by the time he is 22.

"It’s amazing," he says.

But even if workers come flocking, the oil companies still have other problems. Creating energy from oil sands requires so much energy that the oil companies wind up spiking greenhouse gas emissions.

"And they do it in volumes that exceed any other production of oil crude anywhere on the planet," says Elizabeth May, the director of the Sierra Club of Canada.

She takes issue not only with what the oil sands are doing to the atmosphere, but to the land. The oil companies, environmentalists say, are digging up an entire province. Take a helicopter ride over the mines and you’ll think you’re flying over the moon after a moonquake.

"One of the reasons they can be mined the way they’ve been mined is the out of sight, out of mind aspect of it. And your film crew is one of the few that’s gone in there to look at how devastating this is," May says.

Even money men like Pickens have noticed. "Can’t argue with it. I mean, there’s no question that, that they’ve got a mess up there. But I do think they’ll take care of it over time," he says.

The oil companies say they will reduce greenhouse gasses and they point out they are required by Canadian law to refill old mines and plant new trees, and that is happening — slowly. One company, Syncrude, has even introduced bison to land that once was a barren pit.

Rick George of Suncor Energy insists in the future people won’t recognize the mines. "So what you see today is a mine. What you’ll see 10 years from now is a replanted forest," he says.

"You’re telling me that if I come here, it’s gonna be pretty?" Simon asks.

"Absolutely," George says. "These sites will all be going back. Now we’ll be minin’ at a different location at that point.

"This will look forested when we get done with it in 20 years time."

But there is a larger question that not only environmentalists are asking: will the availability of an enormous supply of secure oil right next door mean America will have little incentive to reduce its dependence on oil?

"What Canada’s doing," says May, "is continuing to feed the U.S. addiction to fossil fuels, instead of being the kinda friend who says, 'Let’s make a helpful intervention here.' We're acting as the supplier of a drug fix to the U.S., while all the time saying, 'Just say no.' But we keep selling it."

But unless the Chinese go back to bicycles and Americans trash their SUVs, there will be buyers — for oil anywhere, no matter how it’s found or mined. Right now, Canada has become the land of opportunity for oilmen. They will tell you there is little else on the horizon.

"Bob, if you take a tablet and put on it where is supply gonna come from that we don’t know about today. And you put down all the optimistic points, that tablet will basically be blank," says Pickens.

As blank as the landscape around Fort McMurray, where the world of oil exploration ends.

Does Pickens think the days of cheap oil are gone?

"They’re gone," he says. "From what we knew as cheap oil, when I pumped gasoline in Ray Smith’s Sinclair station on Hinkley Street in Holdenvale, Oklahoma, 11 cents a gallon, that’s gone."

Will we ever again see $1.50 a gallon? "We won’t ever see $1.50 a gallon. No, that’s gone," says Pickens.

Right around the corner from Fort McMurray you can still see oil being produced the traditional way. It’s picturesque now. The wells are still pumping but they belong to the past, like the iron horse that once rode across these prairies.

The future? Up here in Alberta they’re convinced it’s in the dirt.

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debbieD

I saw the program last night. Very interesting, and it bodes well, economically, for Alberta and Canada. I hope they keep their promise of replanting areas previously mined.

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Pierre

I missed the broadcast since I was away for the weekend.

The Suncor stock price jumped up more than $3 today.

Debbie, Suncor planted 1m trees so far.

In one instance the company was required to replant an area next to the river which was cleared for a project. When the project people came back to replant, a few months later, the place had been overgrown with indigenous shrubs... the muniscipality agreed not to disturb the new growth near the river banks.

But the area excavated for the whole oil sands, is huge. The one tailings pond at syncrude is the largest man made lake on earth.

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Boer_in_beton

I am a Process Manager at Sasol Secunda who'll find myself out of a job within the next 5 years (Affirmative Action). I am 28 years old (worked 9 years for Sasol-started at the bottom) and very eager to contribute to a company who'll look after me. Do anyone have contact details for the oil companies in Fort McMurray?

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Joggie

Jaco,

Hier is n link na die website van Suncor Energy. Ek kontrakteer al vir 4 jaar aan die maatskappy. Ongelukkig nie in jou area nie. Ek is n IT konsultant.

http://www.suncor.com

Ek het gou n search gedoen van hulle careers link af en daar is 151 poste beskikbaar in net in Alberta (Provinsie) hoosaaklik in die stede Calgary & Fort McMurray.

Hoop dit help

Groete

Joggie

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Pierre

Fort McMurray's infrastructure crisis is getting to be a political issue.

Recently the local municipality opposed the expansion project of Suncor because of infrastructure overloads. The EUB is still considering the application by Suncor to go ahead with its expansion. Meanwhile othe major oil companies are logging their applications for go ahead as well. I would be interested to see if the municipality will also oppose them.

But politicians, with strong backing from the liberal party is using the situation for provincial debate. FMM has been a conservative base for many years - ever since Trudeau punished the oil industry in Alberta.

People are picking up on this in the news and are concerned about coming to FMM if there is an infrastructure crisis because of the growth of the town. A lot of money is being pumped into oil company projects. Not enough money is going into town development. There is not enough time, people, money to keep up with developments. Growing pains for a small city.

My advice to potential newcomers is to come and look for themselves because political debate creates a lot of noize which needs to be filtered out. Even NDP Jack Layton was here recently echoing the liberal views. "Whats the big rush" he proclaimed - take your time and slow down oil sands development... so the infrastructure can catch up.

FMM has a problem - its growing too fast - What a nice problem to have.... !

Rome was not built in a day - but people seem to expect FMM to better that. And Rome did not have the winters we have here to cope with during construction.

I remember going through similar growth pains in Richards Bay, SA. The town was the fastest growing town in SA for a number of years. Growing at 15%/yr. house prices tend to sky rocket, not enough shops, its too hot, people need air conditioners at home, Durban is far to travel to for entertainment and major shopping ... etc. But it got through that growth phase without too much fuss.

Below is an article from Todays paper.

...............

The province shot down the opposition's request on Monday for an emergency debate in the legislature about Fort McMurray's infrastructure crisis.

Liberal Party leader Kevin Taft asked that the legislative lssembly be adjourned to discuss a matter of urgent public importance, namely the mounting risk to pending and future investments in Alberta's oilsands, the potential loss of public royalty revenues, and the diminishing ability of local authorities to cope due to the failure of the government to plan and provide necessary public infrastructure and community services in the regional municipality of Wood Buffalo.

This week marks the second shortest sitting of the legislature since 1997.

Is this an urgent issue? No, it is not, Mr. Speaker, replied local Fort McMurray-Wood Buffalo MLA Guy Boutilier said in the legislature, according to a Hansard transcript.

Therefore I do not support under urgency what is being suggested here this afternoon.

During a hearing last month by the Alberta Energy and Utilities Board, looking into Suncor Energy's $7-billion expansion, Boutilier called on the Alberta government, oilsands companies and Ottawa to address the pressing needs of high-growth communities like Fort McMurray.

The speaker denied Taft's request, which followed the Liberal leader's hammering of Premier Ralph Klein and five other ministers about what the government is doing to address Fort McMurray's strained infrastructure, housing, and health services.

This PC government, openly boasting about being on auto-pilot, failed to anticipate the obvious, said Taft, referring to provincial reports dating back to 1997 that predicted the current growth in the region.

The actions and inactions of the government have created a crisis for this community, he said.

Klein agreed the region faces challenges, but not problems, and refused to consider government intervention.

There are challenges related to the rising costs of construction and so on, but it remains true that the market must prevail. If we tamper, as the Liberals and (New Democrats) like to do with the marketplace, it's so hard, so difficult, to undo what has been put in place through legislation or policy or government.

When Taft asked Boutilier in the legislature, in his role of environment minister, if he believed that the proposed rate of expansion of oilsands plants is in the interests of the residents and environment of the Wood Buffalo municipality, Boutilier replied, The over $750 million of infrastructure projects that are going on demonstrates clearly we are listening to the people in Fort McMurray-Wood Buffalo or in Cold Lake or in Peace River or in southern Alberta or central Alberta.

Responding to Taft's question if she has cautioned the energy minister that health care services in McMurray are not keeping up with growth, Health and Wellness Minister Iris Evans said, "Alberta has attracted 800 more physicians in the last five years, and many of them are choosing to locate in the north."

This summer, the Northern Lights Regional Health Centre was forced to close 16 of its 102 beds and shut down an operating room due to staff shortages.

The region is also saddled with an $11-millionand 150 vacant staff positions.

Taft took aim this morning at the ministers' replies, saying they reveal the government's complacent attitude.

"Guy (Boutilier) never addressed environmental issues in his answer, and he made it clear his government will always be trailing the problems instead of solving them. The losers will always be the residents of Fort McMurray," Taft told Today.

"It's frustrating when we raise serious questions in the legislature and all we get are trivial or irrelevant answers."

Regarding Taft's charge that he's seen "no sign of twinning (of Highway 63)," Infrastructure and Transportation Minister Ty Lund said "they will be constructing there immediately," and Highway 881 will be paved this year.

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Pierre

Ambassadors tour the oilsands

Thursday September 28, 2006

Thirty diplomats are in the oilsands today.

Syncrude Canada confirmed to Today that numerous foreign ambassadors and high commissioners from Ottawa are touring its facility.

Hoping to drum up more business and workers for Alberta’s red-hot economy, the province rolled out the red carpet for the diplomats in Calgary Wednesday.

And one of the first things Energy Minister Greg Melchin did was offer his guests a new job.

Responding to a quip from Shahid Malki, Pakistan’s high commissioner to Canada, about whether ambassadors qualify for Ralphbucks (The $400 Alberta Resource rebate), Melchin invited the delegation to drop off their resumes when they visit Wood Buffalo today.

The visitors include ambassadors and high commissioners from a list of countries that includes Algeria, Brunei, Finland, Mexico, Peru and Switzerland.

“I think it’s just a further recognition of the global importance of the resource that we have,” Mayor Melissa Blake said this morning.

“Quite often you’ll find that the Province of Alberta or Ottawa are very proud of the asset. We’re certainly encouraging people to come and get to know more about what we have here,” the mayor said.

The Ottawa-based diplomats -- representing Europe, Africa, South America, the Pacific Rim and the Mideast -- were in Calgary for sessions with provincial officials, tours of businesses and a meeting with Mayor Dave Bronconnier.

But the diplomats won’t meet with Blake today.

Blake said the municipality has been involved in numerous visits with high-ranking government officials.

A number of U.S. congressmen and senators have come in the past to the oilsands without seeing the mayor.

Blake, along with provincial government officials, received Prince Phillip when he visited in 2005.

“I was thrilled to be part of that one but it’s not automatic by any means (that the municipality is always involved),” the mayor said.

“I’m always open to hosting anybody, but it’s not essential,” she said.

The tour is primarily energy-focused to help the diplomats gain a well-rounded understanding of Alberta’s economy and the province’s international relations, said a spokesman from Alberta International and Intergovernmental Relations.

When Gary Mar, minister of the department, spoke to the diplomats Wednesday he addressed the shortage of labour in the province and how Alberta was built in large part with the help of people from outside the country.

“This is an extension of that and we want to make sure they have an understanding of Alberta’s development and how they could play a role in helping us continue to develop,” said the an Alberta government spokesman who did not want to be named.

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West Works

I have sent you a Private Message here. Pop me off an e-mail if you would like some assistance, along with the information provided here by the other members.

Groete,

Dave

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Pierre

Dave, I did not receive a pm, but assistence is always welcome.

My knowledege is limited and some of the questions coming in, is out of my field of work.

This website has become a source of information to people from SA and elsewhere.

When I do answer detailed questions such as "settling in" has been asking it may not be correct or up to date. I am just giving the bit that I am aware of.

Before I came to canada, the source of information was limited. There was no Sacanada available. I spoke on the phone from SA to two or three guys in FMM who worked with me previously. Their interpretation and experience was enough to satisfy my needs at that time.

Please contribute your insights on the labour and cost of living trends as you see fit. Also oil industry news and lifestyle developments.

And if you know of mechanical engineers from the oil industry in SA who are loooking for employment ... let me know. My dept is looking for a few and elsewhere in maint/constr/projects as well.

I dont know if the supply of engineers from SA has dried up but the oil industry in Venezuela has become a good source recently.

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Pierre

The Oil Reserve 8 Times Bigger than Saudi Arabia's

All of a sudden, the oil sands in Alberta, Canada have become a veritable “black gold” mine. And Big Oil’s heavy hitters are wishing they acted sooner…

Just three years ago, when the average price of crude was $29.63 a barrel, producers didn’t find the profits to be worth the costs of processing the oil sands. But improvements in mining technology have dramatically reduced the cost of extraction, rocketing bottom lines skyward.

According to the Oil Sands Discovery Centre in Alberta, it now costs an average of just $13.21 to process each of the 2.5 trillion barrels of oil embedded in the sands – a reserve 8 times bigger than Saudi Arabia’s... and more oil than all of OPEC's members combined. Now, Big Oil companies that didn’t get in early can only sit by and watch as “savvy oil” laughs all the way to the bank…

With crude selling for $60-plus, revenues at Albert’s premier oil sands producer are hitting record highs. Earnings per share have climbed 1,338% year-over-year. The company operates the region’s single-largest extraction operation. And its CEO says the mine will be in operation for at least 25 years.

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Harry
Within a few years, the oil sands are likely to become more important to the United States than all the oil that comes to us from Saudi Arabia.

Pierre,

As I have it, Canada is the largest source of oil for the USA right now anyway. However, I suspect that quote refers to just the Oil Sands alone. I believe Mexico has surpassed Saudi Arabia as supplier to the USA. See here.

Until recently folks said the Oil Sands represented the SECOND largest reserve after Saudi Arabia. See here, for example. However, the assessment depends on the price of oil. The higher the price, the greater the cost-effectively extractable amount of oil. So with higher oil prices, the reserve will be assessed to be higher.

The bit I do NOT follow, is how we got from reserves of 180 billion barrels to 2,000 billion (8X Saudi Arabia) in terms of oil reserves, referring to your last article.

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Pierre

Harry, I admit I was surprised to read about the oil sands reserves being 8 times. I have heard it mentioned many times that the oil sands reserve is second only to the Saudi reserves.

The figures depend on how you read it. The reserves in the oil sands is several trillions in size. But the economic extractable reserve is much less and that is the figure usually quoted.

The oil sands is spread out in patches which stretch from a hundred km north of FMM to Cold Lake in the east and around Athabasca in the west. The Cold lake patch stretches into Saskatchewan quite a bit.

Very little of the oil sands have actually been recovered. It takes a long time to confirm the exact depth of a reserve and the most economic method of extraction. There is also a lot of research being done and new methods of 'mining' the oil is constantly being introduced. When a business plan is eventually put together and investors found, then the plant has to be designed and built. On a green fields site such as up in FMM, it takes several years for a mine site to start producing oil. The towns of Cold Lake and Athabasca are prime sites for property investments. People just dont know it yet - even those living there.

A refinery plant is being planned just north of Edmonton. Allready property prices in small small villages around are picking up. Edmonton has a few refineries which accept oil from the FMM plants, refine it and send it into the distribution pipe network. There are only two refineries in FMM. The others pump oil to Edmonton and beyond.

There are two large pipe routes going from EDM into the USA, one to the south at Denver, CO, and one to Chicago, New York and also branch off to Sarnia and Toronto. Getting the oil to the USA is simply mass production with no trucking, shipping, harbour transfer etc. Even though the price of oil is much cheaper to pump out in the middle east, it takes a lot of infrastructure to get it to Houston.

Currently it is still cheaper to bring oil in to Houston and southern states or to mine it in Texas than to get it there from FMM. But somewhere between Houston and Denver is the break even point where it becomes cheaper to get oils from FMM. The pipeline company wants to expand the capacity of the lines south, but it has to go through an area in Montana which is controlled by the aboriginals living there. And they refuse to let the pipe go through their area, although it is underground. Negotiations are still underway.

Meanwhile a pipeline to the west coast is being planned to be able to export it to China.

All in all it is quite an undertaking to expand current capacity. The distribution infrastructure to match it is required. Meanwhile diesel from here is being shipped by rail to Vancouver and sold directly to bulk consumers, without storage facilities. the rail cars are pumped directly into waiting road tankers. All of this cuts the distribution cost and makes it competitive in a further stretching web.

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Pierre

Well, what can I say ... it's nice to work for a successful company.

...................

Suncor Energy named one of Canada’s Top 100 Employers

Calgary, Alberta (October 10, 2006) – Suncor Energy Inc. was recently named to the 2007 list of “Canada’s Top 100 Employers” and “Alberta’s Top 25 Employers” by Maclean’s magazine. The list singles out employers that lead their industries in attracting and retaining quality employees.

Suncor was among the 60,000 employers in Canada reviewed by Maclean’s editorial team and one of 1,500 employers included in the Top 100 application process this year.

“Our employees are the key to our success so we must be innovative to ensure we attract and retain talented people,” said Sue Lee, Suncor’s senior vice president, human resources and communications. “That means creating a culture that nurtures and rewards excellence.”

Suncor Energy Inc. is an integrated energy company headquartered in Calgary, Alberta. Suncor’s oil sands business, located near Fort McMurray, Alberta, extracts and upgrades oil sands and markets refinery feedstock and diesel fuel, while operations throughout western Canada produce natural gas. Suncor operates a refining and marketing business in Ontario with retail distribution under the Sunoco brand. U.S.A. downstream assets include pipeline and refining operations in Colorado and Wyoming and retail sales in the Denver area under the Phillips 66® brand. Suncor’s common shares (symbol: SU) are listed on the Toronto and New York stock exchanges.

Suncor Energy (U.S.A.) Inc. is an authorized licensee of the Phillips 66® brand and marks in the state of Colorado. Sunoco in Canada is separate and unrelated to Sunoco in the United States, which is owned by Sunoco, Inc. of Philadelphia.

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Pierre

Here is the downside to oil production.

The tonnage below in terms of volume would be humongous.

Albeta emits more greenhouse gases than any other province.

Greenhouse gas emissions in tonnes in 2004

1. Ontario Power Generation 24,887,358

2. TransAlta Utilities 22,672,480

3. Saskatchewan Power 13,669,500

4. Alberta Power 11,957,574

5. Nova Scotia Power 10,570,678

6. Syncrude Canada 10,367,463

7. Suncor Energy 8,599,254

8. Epcor Generation 6,898,565

9. Petro-Canada 5,731,121

10. Dofasco 4,863,485

Source: PollutionWatch.org

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Pierre

Opposition to oilsands growth, gains support

Monday October 16, 2006

FORT CHIPEWYAN -- Patrick Simon is sure he still can drink the water in Great Slave Lake. What he doesn’t know is for how long.

The environment manager with Deninu Kué First Nation in Fort Resolution, N.W.T., told an Alberta government panel meeting in this hamlet about his band’s concerns about the quality and quantity of water in Slave Lake during the final leg of the multi-stakeholder oilsands consultation in Fort Chip.

“We know a time when our water was purely healthy and for us we’re seeing it’s getting dirty,” Simon told Today in an interview last week.

“It’s hard to tell people from the south because they’re used to a lower grade of water. When they see our water, they automatically think our water is clean. They can’t see the significance of the changes occurring.”

Contaminants are increasingly present in the river system, Simon said.

“We know (contaminants are) coming from the municipal and industrial discharges from these megaprojects such as the tarsands.”

The Athabasca River drains into the Peace-Athabasca Delta into Lake Athabasca. The Slave River flows from there through Fort Smith and empties into the Slave Lake and eventually through the Mackenzie River into the Arctic Ocean.

Water users downstream are concerned about the low water flows because of low volumes of rain in the past months, while others blame water huge withdrawals by oilsands plants.

“The fact is not enough rain was collected in the basin. With the extra amount of water being used by the industry in Fort McMurray and they’re bringing megaprojects again -- they’re just going to suck water out of the river,” Sonny MacDonald, the aboriginal representative to the Mackenzie River Basin Board in Fort Smith, N.W.T., said in a telephone interview.

“Not only the Athabasca run, the whole basin itself is very low,” he said.

MacDonald said he is aware of the concerns by the residents of Fort Chip, where he was born and raised.

“We talk to authorities, but everything seems to fall on deaf ears. What has to take place in Fort McMurray area is to slow down these megaprojects. It’s happening too damn fast and the end result is people suffer downstream from them,” MacDonald said.

Syncrude Canada told the panel during the series of consultation that slowing down oilsands development would hurt Alberta economically. During regulatory hearings for project applications, Suncor Energy and Albian Sands they wouldl lose millions of dollars if projects are delayed.

But for MacDonald, water is far too precious to compromise for economic gains.

“Water is a very important (resource) for life. You can live on water for 40 days but you cannot live without water for four days. Water is very important for our quality of life,” MacDonald said.

Jack VanCamp, executive director of the Mackenzie River Basin Board, said there are concerns about the decreasing flow levels in the region.

But there have been other problems with water withdrawal by BC Hydro and contaminants from the pulp mills, airborne mercury and mercury liberated by erosion, he said.

Residents downstream of the oilsands, he said, worry about the danger posed by tailings ponds at the plants.

“If the tailings ponds ever break loose and leak into the Athabasca, certainly there will be problems. We’re definitely downstream of all that, so whatever gets into the system as a result of activity in the oilsands comes flowing by ultimately ends up in the Arctic Ocean, if it’s not broken down before it gets there.

To make sure Deninu Kué’s concerns are heard by the Alberta government, Simon said, his band is planning to intervene in future oilsands regulatory hearings.

“We’re not part of that process yet, but we will take necessary actions required,” he said.

“We’re not saying no to development. We’re saying to do it in consideration to people, animals, water.”

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Pierre

Oil and politics go together in FMM and Alberta.

Ed Stelmach seems to be a 'hands on' man with a lot of common sense.

..............................

Tuesday December 05, 2006

Industry applauds premier-designate

Premier-designate Ed Stelmach’s victory is being warmly welcomed by Alberta’s oil patch even though he wants more of the oilsands to be processed within the province.

“We have always found him extremely open, very forthcoming in terms of looking for information,” Pierre Alvarez, president of Canadian Association of Petroleum Producers told Today in an interview from Calgary.

Stelmach has worked very closely with the oil and gas industry over the years when he held various cabinet positions, Alvarez noted.

“Comments on Monday at the press conference in terms of government not deciding who is not going to proceed with projects” is a cause for jubilation for the energy industry.

“That this government would stay out of the business of businesses, recognizing the importance of infrastructure and labour shortages were clearly important messages for us,” Alvarez said.

Stelmach told reporters on Monday “there’s no such thing as touching the brake” on the blistering pace of oilsands development. It will sort itself out, he said, adding, “We just want to make sure that we’re globally competitive.’’

The premier-designate stressed the need for more oilsands processing to remain in the province. He said he knows “we can’t add value to every ton of bitumen, but we can certainly improve that.’’

Stelmach wasn’t offering any specifics on how that would work, but refining the synthetic crude oil derived from tar-like bitumen is an expensive process that most companies have determined is uneconomic to perform in Alberta.

EnCana Corp announced a $15-billion deal with ConocoPhillips in October to ship oilsands crude from Alberta to refineries in the United States. That pact came after EnCana spent years looking for a partner to handle refining operations.

EnCana spokesman Alan Boras said Monday the Calgary-based company would welcome any increased options to process oilsands feedstock within the province.

‘‘We made an arrangement that fit the circumstances at this time,’’ he said.

A Calgary-based environmental think-tank is also pleased with Stelmach’s election.

“I think we’re encouraged by the fact that he is open to listening to people and listening to diverse views,” said Marlo Raynolds, executive director of Pembina Institute.

But the policy analyst said it’ll be critical for Stelmach to keep a very high awareness of the different sectors of the province.

“It’s very clear that Albertans care dearly about the environment and want to do something about climate change specifically,” he said.

Raynolds pointed out that Stelmach’s environmental platform is “not extremely strong” and it’s an area where the northern Alberta politician needs to get up to speed quickly.

“He has some huge challenges to face in the environmental front and I hope he raises that as a real priority,” he said.

Raynolds also said Stelmach’s royalty review must be as public and transparent as possible.

‘‘It is Albertans’ resource,’’ he said. ‘‘We need to start thinking like owners on how we want to manage this resource over the long term.’’

Alvarez dismissed the notion that the industry preferred Jim Dinning over all the other candidates.

“The industry is made of thousands and thousands of individuals and I know people in the industry who were supporting all three candidates,” Alvarez said.

Alvarez also rejected the idea that the industry be equated to Calgary because most of the industries are based outside of that city.

There’s industry in Fort McMurray, Grande Prairie, Medicine Hat and Lethbridge, he said, adding, “I don’t think there was a block coming out of the oilpatch at all.”

Stelmach also announced that he and his new cabinet, expected to be smaller than the current group, will be sworn in Dec. 15

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Pierre

Reponse to the previous comments.

Stelmach’s view on growth challenged

Thursday December 07, 2006

An Edmonton-based think tank disagrees with premier-designate Ed Stelmach’s statement, “there’s no such thing as touching the brake” on oilsands development.

“We sure are excited that there’s a new premier and we hope that he can be persuaded about slowing tarsands development,” Gordon Baxter, executive director of Parkland Institute told Today in a telephone interview.

“The pace of the tarsands is way too rapid. The premier said you can’t put the brake on, that’s not true. We can and we must. We know that the development is going way too rapidly to be sustainable,” he said.

For Mayor Melissa Blake, the premier’s statement isn’t the final authority. She’s relying on the Alberta Energy and Utilities Board to deal with Wood Buffalo’s concerns.

During the regulatory hearing for Suncor Energy’s Voyageur project, Blake implored the panel to slow the development so that the province and the industry can accurately predict growth in the region and address problems. But the board approved Voyageur with recommendations.

“Ultimately, no one would like to see unnecessary detriment to the market. So we’d like to see the growth in this region as much as anywhere else. We just need to have the infrastructure required to support the population that’s here,” Blake said.

The mayor also pointed out that Stelmach has said he will look into the infrastructure needs for high growth communities like Fort McMurray.

“I think that’s an important tie-in and if we can get these things together to facilitate development then we’ll be in a much better position .... We have no assurance that’s going to be resolved,” the mayor said.

Baxter said the oilsands is driving construction in Alberta to the wall with labour and material shortages. He also blames the oilsands for increasing greenhouse gas emissions.

Parkland doesn’t want operational oilsands plants to be shut down nor the new projects in the pipeline stalled but it wants a plan for future development.

“Not only does it hurt everybody in terms of quality of life, it puts up the cost for everything in the province, even in the public sector,” Baxter said.

During his campaign Stelmach promised to give municipalities $1.4 billion, new funding that will be phased in over three years.

It’s a good move in resolving municipal infrastructure problems, Blake said, but Wood Buffalo’s needs alone were priced out at $1.2 billion last year. The proposed allocation by Stelmach, Blake said, is “insufficient to deal with the kind of growth we’re experiencing and will continue to experience.”

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Pierre

An innovative approach to cutting costs

Barges a factor in cutting Northern Lights project cost by $1.2 B

Thursday December 07, 2006

It takes time and costs more to bring in temporary foreign workers to the oilsands: that’s why the partners in the Northern Lights project want to send jobs to Asia.

Synenco Energy Inc. and its Chinese partner, SinoCanada Petroleum Corp. announced Wednesday they plan to send prefabrication work to Korea, China and Malaysia for their proposed mine site 100 kilometres northeast of Fort McMurray.

Traditionally, the gargantuan modules for the oilsands plants were constructed in Edmonton and the surrounding area. The tight labour pool, increasing costs and transportation limitations have resulted in significant overruns in construction budgets.

Northern Lights owners will save at least $1.2 billion by fabricating the modules in Asia because labour will be reduced by 55 per cent.

They’ll require a maximum of 900 workers down from 2,000 that would be needed if the project were made in Alberta, president Todd Newton told reporters.

The cost of the 110,000-barrels per day bitumen mine will be reduced by 21 per cent to $4.4 billion, compared to a $5.6-billion price forecast for an Alberta-made model, he said.

The infrastructure for transporting the 30 giant modules weighing 2,000 tonnes each is already in place: the river.

From South Korea via the Pacific Ocean to the N.W.T. through the Mackenzie River, down to Slave Lake, connecting to Lake Athabasca and onto the Athabasca River, the modules will be carried by a barge to the Synenco oilsands site.

It would take 1,000 module pieces limited to 175 tonnes each for truck deliveries to make the modules in Edmonton fabrication yards, Newton estimated. The strategy will relieve strain on the province’s supply of skilled workers rather than leave workers unemployed, Newton said.

The marine route is not new. In fact, it was used by explorers hundred of years ago and by Yukon gold rush pioneers, although they headed north, not south. Tugboat and barge deliveries from the Fort McMurray area headed north still ply the river route.

Northern Transportation Co. Ltd. (NTCL) sailed to the barge landing north of Fort McMurray in July to demonstrate that cargo shipped by sea from other parts of the world could reach the Oilsands City.

David Foster, NTCL president, predicted last summer barges would once again become an important transportation method.

“This has always been a viable option, but business had not been there. Now there seems to be pressure on the infrastructure in Fort McMurray ... and this transportation option will provide a solution to some of those challenges,” he said. Barges don’t have the same weight and size restrictions as highway transportation, so larger pieces can be moved at once, saving time and money, Foster said.

Newton wouldn’t say whether NTCL got the contract for transporting the modules from N.W.T. to the oilsands site. But he said the company has engaged Mammoet Cranes and that “a particular company that did the trial run down the Athabasca River may be one of the entities that this logistics firm hires for a portion of this transportation service.”

Project cost cuts will increase government royalty and tax revenues, Newton predicted.

Oilsands projects pay one-per-cent royalties and virtually no federal taxes until they recover construction costs. “You want Alberta taxpayers to give you a penny-on-a-dollar royalty. You want them to let you dig a great big hole in the ground of Fort McMurray and you want to ship thousands of jobs overseas to (Asia) and you say there’s an upside here, I don’t get it,” Neil Waugh, a columnist for the Edmonton Sun, asked Newton during the news conference on Wednesday.

“How does this fit in with the direction that the premier-designate (Ed) Stelmach said that he doesn’t want raw bitumen processed outside of Alberta and he also wants to review the royalty structure so Albertans will get a fair share?” Waugh asked.

Newton said the important thing to keep in mind is that the project will create a great deal of value for Albertans and Canadians because the project will create 1,100 permanent jobs once it’s up and running.

“We’ll employ those people for 30 years or more and the favourable capital cost profile associated with this structure will mean that the project will reach payout level on royalties sooner,” Newton said.

This means the partners, will pay more royalties to the province than if they would incur higher capital costs, Newton said.

“And we will also begin paying income tax sooner than what we would otherwise pay in the event that we incur a higher capital cost.”

The oilsands partners may use the same approach to construct their upgrader in Sturgeon County but details of that will be announced next year.

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Pierre

Officials grilled on oilsands impact on Athabasca River in Alberta

Wed Nov 22

EDMONTON (CP) - Federal officials were grilled Wednesday over the impact oilsands development will have on rivers depended upon by aboriginals in northeastern Alberta.

Imperial Oil's (IMO.TO) $5.5-billion Kearl project, combined with other projects in the area could suck enough water out of the Athabasca River to destroy the commercial and subsistence fisheries, says Karin Buss, a lawyer who represents the Athabasca Chipewyan and Fort McKay First Nations.

Buss says governments have been unable to set limits on the amount of water withdrawn from the river and are unwilling to enforce a solution.

"We're getting to levels where we're going to lose habitat for fish and there's a potential to lose fish populations," she said outside hearings held by Alberta's energy regulator into the Kearl project.

Producing oil from bitumen requires vast amounts of water, water that is drawn largely from the Athabasca River.

Aboriginal people have already noticed the level of the river dropping and they fear the consequences for a vital resource.

"We get the bulk of our food from the land," said Lisa King, an environmental specialist with the Athabasca First Nation, who added that fish is on the table in her community as often as four times a week.

A commercial fishery in the area also provides jobs, said King.

"We're worried. There are too many unknowns out there."

Government bodies have so far been unable to decide how much water needs to flow through the Athabasca to maintain its ecosystem.

But Alberta Environment and the federal Department of Fisheries and Oceans (DFO) are within a couple months of implementing regulations on water withdrawal to prevent the river from falling below historic low-flow levels.

"There needs to be something put in place right now," said spokeswoman Kim Hunt.

A second phase of regulation will attempt to bring all parties together to decide how to deal with the river in the future.

"We know we're not going to achieve consensus right now."

The regulations won't cut companies off entirely during low-flow periods, said Bob Lambe, DFO regional director-general. But they will force reductions in the amount that can be withdrawn and encourage companies to make best use of those times when there's lots of water in the river.

"What they would be able to do is use some sort of means to take (water) when there is less risk," he said.

But the proposed regulations acknowledge fish habitat will still likely suffer during low-flow periods, and Buss says they lack an absolute limit of what can be withdrawn.

"There's no cut-off, and there's no cut-off in sight," she says.

A better solution already exists, says Buss.

Water levels are only a problem in the winter. A storage pond impounding water from the abundant summer flow would ensure oilsands plants get all they need during the winter, while keeping the Athabasca high enough to support fish.

Buss says the pond, which could be used by all energy companies in the area, would cost between $150 and $200 million.

"We don't need to risk the river," she said. "(But) industry doesn't want to pay for storage."

Hearings on the Kearl project will last until the end of the week.

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Matisse
Buss says governments have been unable to set limits on the amount of water withdrawn from the river and are unwilling to enforce a solution.

Government bodies have so far been unable to decide how much water needs to flow through the Athabasca to maintain its ecosystem.

But Alberta Environment and the federal Department of Fisheries and Oceans (DFO) are within a couple months of implementing regulations on water withdrawal to prevent the river from falling below historic low-flow levels.

Amazing, isn't it! The oilsands have been going on for a while and government still don't have a regulatory framework in place to assess and control environmental impacts.

I guess the Alberta government's priority is to let the oil tax dollars roll in and let future generations pay for the environmental mess.

Edited by Matisse

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Pierre

Matisse, the water taken from the Athabasca river is regulated. I know because our company has a set limit. I am not sure which authority sets the limit though.

However every opportunity that comes by for the first nation people to make a claim for damages is taken advantage of since it is not compensation that has to be earned or worked for. It is free. That is why they have a lawyer representing them.

Some time ago there was an issue with a dam being built in the peace river which flows into the Athabasca lake. A similar claim was made for compensation because the river will run dry or low level and the first nations would not be able to fish for food. Somehow it got settled out of court but I dont know what the compensation terms were. It satisfied the first nation people though.

The reason I posted the article is to show the sensitivities that are at play in the region. Water is very much a political issue.

Water quality is probably more important to focus on than quantity.

I guess the Alberta government's priority is to let the oil tax dollars roll in

I will not disagree with you on that. As you can see there are big numbers being quoted. Compared to the size of the town .... the money flowing through here is almost bigger than the water passing by in the rivers.

There are two fairly large rivers converging at FMM. The Athabasca and the Clearwater river. They flow to the Athabasca lake and fill it up. There are smaller rivers that join in along the way as well. The lake overflows towards the northern ocean.

The Athabasca river starts at the Athabasca glacier in the rockies.

By the time it gets to FMM it is a huge amount of water flowing constantly without dams inbetween. There is no pipe or pump system going to empty it.

I think the main issue is the seasonal changes.

In winter the rivers freeze over and water flows beneath the surface. I dont know how much water flows under the ice, but I assume it is much less than in summer months. The Athabasca lake freezes over as well.

People dont fish on the river in winter, but possibly on the lake. Other lakes in the area is fished in winter but not on a large scale. It is mainly sports fishing.

So the lawyer proposes to store water in a dam in summer for use in the winter. Well preventing it from freezing would be a major issue to deal with. The thickness of the ice on a lake is much more than on a flowing river. It may well freeze to the bottom depending on how deep it goes. I doubt whether the companies would invest in a common project for this purpose. Each one has their own water storage anyway. The water surfaces around a factory site is hugh. The arial photos we have show vast expanses of water ponds with various types/quality of water which is use in the process. Just the make up water is drawn from the river.

let future generations pay for the environmental mess.

This is not the case. No business in the oil sands can function without water. The industry would not get investment if the water was not available. Also I am aware of efforts being made to reuse more water and not take additional water from the river for expansion projects - for those companies allready in production.

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Pierre

Here is a pic of a little lake called crane lake, for nature preservation ajacent to the factory. The stacks in the background.

post-46-1166043045.jpg

I havent seen any cranes there but we constantly have to keep birds away from the water ponds so they dont drink the water. In winter some of the ponds stay fluid due to hot water processing and become an easy source of water for animals.

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