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Pierre

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Pierre

Some water pics around FMM.

The mighty Athabasca river. The one golf course greens are visible on the right hand side.

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Another view of the Athabasca

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A river runs around it - Athabasca in the forefront, Clearwater river at the back and downtown area in the middle. Most of the residential area are on the hilltops surrounding the downtown area.

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Gregoire lake. The largest lake just 20km out of town.

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Gregoire lake beach - mossies love this place as well.

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The Snye river in fall

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Matisse

Pierre, thanks for the clarification. It’s good to know there is already a regulatory regime in place. But I guess until the authorities have determined the base flow requirements of the river system any water allocations are a kind of a shot into the dark.

I guess present regulations would also control containment of polluted water on mining property and releases of polluted water back into the system.

It would be a pity if first nation groups or whoever else are crying wolf just to gain a financial benefit, as it would detract from dealing with real environmental concerns.

I havent seen any cranes there but we constantly have to keep birds away from the water ponds so they dont drink the water..

So why should the birds be prevented from drinking the water? :)

And how do you keep the birds away from the ponds?

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Pierre

I dont think the quality of the polluted water on the property is regulated but the releases to the river is most definitely regulated. Waste and toxic waste has special treatment places where they are collected and disposed of via contractors supplying a specialised service. Storm water doesnt even go to the river. Everything is collected and recycled.

The tailings ponds contain effluent from the hot water washing process, this is mostly fine sand and clay and a very small amount of bitumen than could not be extracted, as well as cooling water that may have become poluted from leakages into the circulated water. No toxins are used in the process but cooling water for example is treated with chemical for corrosion inhibition and fungi growth. Birds or humans should not be drinking that. It is dirty water.

And how do you keep the birds away from the ponds?

Ther are scare crows floating on the ponds. They are dressed up to look like workers.

Also air guns around the ponds go off every few minutes. It's a loud bang and sounds like a cannon shot.

We also see deer walking on the property - not sure where they come from because there is a fence around the property. But there are open areas around the river crossing where they may enter or at the far corners of the mines. Bears are also caught on site with bear cages/traps and removed.

Our company also has an active tree planting program. Not too long ago the millionth tree was replanted and duly celebrated.

The other thing about the river water - our company has its own water purification plant and provides potable water. The chemistry is often cleaner than bottled spring water. We dont get muniscipal drinking water out at the plant.

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Pierre

News alert by RBC:It will be interesting to see how this one pans out

Suncor Launches Lawsuit Vs Engineering Co's Over Fire

CALGARY -(Dow Jones)- Canadian energy firm Suncor Energy Inc. (SU) said Monday that it has launched a C$630 million ($537 million) lawsuit against a group of engineering firms over a fire at its oil sands facility in 2005.

The company has launched the claim on behalf of its insurers, from whom Suncor has already collected C$979 million in business interruption payments for the fire.

"We have submitted a claims statement," said Suncor spokesman Brad Bellows. " We support our insurers in their action and they are entitled to have their costs covered."

The fire at Suncor's oil sands unit in January 2005 knocked out around 115,000 barrels of crude production a day for an eight-month period. In a statement of claim filed on Dec. 28, Suncor claimed the cause of the fire was the failure of a nozzle at the oil sands facility.

The engineering firms cited in the lawsuit include Bantrel Co., Bechtel Group Inc., Fluor Inc., SNC-Lavalin and Dacro Industries, among others.

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Matisse

Oh well, I guess the buck must stop somewhere and Suncor wants it to be at someone else's door.

They obviously argue that the engineering company is liable for the defective nozzle. I guess the engineering company can try and sue the supplier of the nozzle, maybe the supplier can sue the manufacturer, and so on. Where does it end? :D

This raises an interesting point for me. Who would be liable for any environmental damage as a result of such a component failure? Logically I would say it is Suncor, but they would probably also have a different view on that!

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Pierre

The case of the failed nozzle is an interesting one for me since I have similar questions as you.

The nozzle that failed is normally not a big deal, but in this case it led to a chain reaction causing a fire that could not be contained and it virtually had to be left to burn out. Fire fighters could not get close enough to extinguish it. And all the water that was sprayed onto the fire fell to the ground and turned into a glacier at -35 at the time.

The nozzle failed because of corrosion but the nozzle did not have the protective overlay coating it should have had. Someone changed the requirements for it during the building of the plant. And that guy is nowhere to be found or any record of his change. Therefore the engineering company has to take responsibility for the design. I thought it would come to this eventually even if the evidence is missing. The insurance paid Suncor out allready, but they want to pass on the liability. It may take a long time for this to be settled, but with the money involved noone is going to give up without a fight.

The engineering companies are in the meantime still doing business with Suncor as if nothing happened.

I was involved in assessing the damage and preparing design changes. You bet the nozzle was coated this time with the best possible overlay possible. The nature of the beast is that many such incidence happen for the first time and is not readily forseen. Industry learns very quickly and the oversight is not repeated. But who knows what else can go wrong... it's new technology in a new developing industry.

Who would be liable for any environmental damage
Interesting question. Generally the insurance covers repair cost as well as profit loss. Each having differing conditions. If the operating comapny was negligent, I guess there would be complications. But generally I would expect the insurance to be picking up the tab for environmental damage. If it is concluded an "act of God", such as abnormal weather, I dont know who will pay. The worst environmental damage would probably be river water pollution. Another company nearby was recently shut down by the environment minister because of air pollution - a new plant was being started up and things were not going as expected, the public was complaining. They could not restart the plant till improvements were made to the satisfaction of the provincial minister. Here is was also a case of new technology from europe being tried out that didnt quite work as well as expected.

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Pierre

Plan to pump the oilsands up to 5 M bbl/day

Thursday January 18, 2007

Canadian executives were urged to massively step up oilsands production to five million barrels of oil per day in a relatively short period of time by their counterparts in the U.S., according to documents obtained by the CBC.

Executives from U.S. oil multinationals and Canadian oilsands producers met for two days in Houston, Texas, in January 2006, the broadcaster reported Wednesday.

They recommended a five-fold increase in oilsands production fairly quickly, according to minutes of the meeting.

Oilsands production output was 1.1 million barrels per day in 2005, according to the National Energy Board. It is currently projected to grow to between three million and 3.5 million barrels by 2015.

The report also said Canada would have to “streamline” its environmental regulations to allow such a massive and speedy increase in production.

In response, a spokesman for Premier Ed Stelmach told Today this morning that executives of U.S. oil multinationals can speculate all they want.

“Before anyone gets too wound up about it, my answer is: there’s that desire and then there’s the realistic situation that we have: the environmental regulations, growth pressures, and the regulatory process,” said spokesman David Sands.

“There’s also the need to maximize upgrading of bitumen in Alberta,” he added, echoing Stelmach’s statement last month that we wanted more of the oilsands production to be processed within Alberta instead of being transported as a crude resource to the U.S.

But that’s not likely to happen unless the U.S. pays for new pipelines, said Bill Almdal, spokesman for the oilsands lobby group, the Regional Issues Working Group.

“A crude pipeline will not carry refined products, so if you refine it in Alberta and ship it, you have to create a whole new pipeline system,” said Almdal.

“The economics aren’t there; we can’t afford it. The U.S. would have to pick up the tab, depending on how badly they want the oil.”

But the five-fold projection isn’t impossible in 20 years’ time, Almdal added, assuming all projects “that have just been mentioned, without engineering plans yet in place” eventually come online.

“Fort McMurray can handle it, but it’ll take a lot of dollars and a lot of work,” said Almdal, qualifying that a massive population increase will put a “huge strain on things.”

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CraigC

Record production and strong commodity prices contribute to solid 2006 financial results for Suncor Energy

January 25, 2007 – Suncor Energy reported 2006 net earnings of $2.971 billion, an increase from $1.158 billion in 2005. 2006 net earnings were $2.320 billion compared to $834 million in 2005. Cash flow from operations in 2006 was $4.533 billion compared to $2.476 billion in 2005.

The increase in both net earnings and cash flow from operations primarily reflects higher crude oil production and higher crude oil prices in 2006. In 2005, Suncor’s operational and financial performance was impacted by a fire that cut production rates approximately in half for close to eight months, while in 2006, Suncor also benefited from an expansion project that resulted in increased production capacity.

“After a difficult year in 2005, we came back strong and went on to achieve a record level of production in 2006,” said Rick George, president and chief executive officer. “The focus now is on the fundamentals – steady, safe and reliable operations as we continue to build the foundation for future growth.”

Combined oil sands and natural gas production in 2006 was 294,800 barrels of oil equivalent (boe) per day, compared to 206,100 boe per day in 2005. Oil sands production averaged 260,000 barrels per day (bpd) in 2006 (253,800 bpd of synthetic crude oil and 6,200 bpd of bitumen sold directly to the market), compared to 171,300 bpd in 2005. Natural gas production averaged 191 million cubic feet (mmcf) per day, compared to an average 190 mmcf per day in 2005.

Oil sands cash operating costs averaged $21.70 per barrel during 2006 compared to $24.55 per barrel in 2005. The decrease in 2006 was primarily due to fixed operating costs being spread over higher production volumes, as well as lower natural gas costs.

Suncor continued to make progress on the expansion of Upgrader 2. Engineering work on the project, which is expected to increase production capacity to 350,000 bpd in 2008, is substantially complete and construction is 69% complete. The project remains on schedule and within budget.

Average daily in-situ bitumen production from Suncor’s Firebag facilities increased to 33,700 bpd from 19,100 bpd in 2005.

Plans for Suncor’s next major stage of oil sands growth were also advanced in 2006 with receipt of regulatory approval for a planned third upgrader and extension of the Steepbank Mine, two key components in the company’s plan to increase production to 500,000 to 550,000 bpd in 2010 to 2012.

In its U.S. downstream operations, Suncor completed modifications in June to the company’s Commerce City (Denver) refining operation that enabled production of ultra low sulphur diesel fuel and the integration of up to 10,000 to 15,000 bpd of oil sands sour crude into the refinery’s feedstock.

In Suncor’s Canadian downstream operations, modifications were completed in July to enable the company’s Sarnia refinery to meet ultra low sulphur diesel requirements. The second stage of this project, slated for completion in the fourth quarter of 2007, is planned to integrate up to 40,000 bpd of oil sands sour crude into the facility’s feedstock and to improve the economic performance of the refinery.

While continuing to expand its integrated oil sands and downstream refining and marketing businesses, Suncor also made advances in its renewable energy strategy with the opening of Canada’s largest ethanol plant and the commissioning of its third wind farm. Further investment in ethanol-based biofuels and a fourth wind farm are planned for 2007.

Maintaining a strong balance sheet remained a priority in 2006. Suncor's net debt (including cash and cash equivalents) at December 31, 2006 was $1.9 billion (approximately 0.4 times cash flow from operations). Year-end net debt in 2005 was $2.9 billion (approximately 1.2 times cash flow from operations).

Suncor achieved a company-wide return on capital employed of 40.6% in 2006 (excluding capitalized costs for major projects in progress), compared to 19.7% in 2005.

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Cathy K

Seems that Alberta will be in the news for the whole of this week.

COMING UP ON GLOBAL NATIONAL

A weeklong look beneath the surface of oil-rich Alberta. There’s a price to pay for living next door to the Fort McMurray oil sands. Environmental damage is examined. Kevin Newman reports on-location on Monday's Global National.

On Shaw this is Channel 11.

Cathy K.

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Matisse
A weeklong look beneath the surface of oil-rich Alberta. There’s a price to pay for living next door to the Fort McMurray oil sands. Environmental damage is examined.

Interesting that you should mention this.

I just happened to listen to a broadcast this morning on CBC Radio about the apparent impact of the oil sands on a First Nation community not too far from Fort McMurray, called Fort Chipewyan.

Apparently there has been an increase in cancer in that community, which was highlighted by the community doctor, Dr. John O'Connor (see here). A health analysis by Alberta Health about the cancer rates in the community appears to be a bit suspect and Dr. O'Connor continued to raise concerns over the issue. Now Alberta Health seems to be trying to silence O'Connor by filing a complaint against him with the Alberta College of Physicians and Surgeons (see here).

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Gordon

It is more likely that the Indians now have a higher level of cancer because of the financial benefits of the oilsands ie. changed diets of junk food and pizza, than due to the results of mining the oilsands.

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Pierre

Albian opens new aerodrome

By CHUCK CHIANG

Today staff

Monday November 19, 2007

With passenger jets from Calgary touching down on Friday, the Albian Sands Aerodrome -- the latest airport attached to an oilsands facility -- officially opened its doors.

Roughly 170 Shell Canada executives and other dignitaries attended the opening ceremonies for the airport, which Albian Sands officials hope will make their projects more attractive to workers.

“When looking at the airstrip, we wanted something smooth, safe, and something where we can land planes 365 days a year,” said Brian Straub, senior vice president of oilsands with Shell Canada, majority stakeholder in Albian Sands. “We really wanted to deliver a world class facility, and it shows that we’re going to be here for years. We plan to use it for a long, long time.”

The Albian facility joins airstrips at Syncrude Canada and Canadian Natural Resources.

New aerodrome construction was delayed last year, after officials became concerned about the effect on the Fort McMurray Airport, both from a safety and monetary sense. After talks, the concerns were dealt with and construction OK’d again.

The Albian aerodrome includes a 2,400 metre runway capable of landing big Airbus 320s and a terminal building with a capacity for 150 people. It is one of the largest private air facilities in the country.

Shell is using the airstrip to transport workers and executives to and from its Jackpine and Muskeg River sites, roughly an hour’s drive north of Fort McMurray.

Among the first passengers landing at the aerodrome was Ian Silk, who will be managing the third phase of the current expansion construction at Albian Sands.

“The thing that struck me was how much more convenient it was to fly on-site versus flying into Fort McMurray or any other airport nearby,” Silk said. “Anywhere else you go, you still have at least 30 more minutes of driving to get to Albian Sands. This probably cuts the journey time (from Calgary) by 50 per cent.”

He added that the airstrip’s ability to handle large planes means that Shell can use those aircraft, faster than turboprops and smaller jets, to further cut short travel time to and from site.

Former Wood Buffalo councillor Jim Carbery was also at the opening, and said airstrips like Albian Sands’ is vital to not only to the oilsands workers.

“The other side of that is that more and more people are living in Fort McMurray, and we need, for the lack of a better word, satellite communities outside of the city,” Carbery said, noting that the airport -- and the recently opened Albian Village workers’ quarters -- will relieve the stress on the Oilsands City. “It’ll perhaps stabilize the rent in town.”

To celebrate the occasion, Shell invited dancers from the nearby community of Fort McKay to perform at the village facility.

Along with the Albian Village, Shell is hoping to position Albian Sands as “the project of choice” for workers, said spokesman Paul Hagel.

“It’s like a cruise ship here,” Hagel said of the village, which can house 2,460 workers and features a gym, a running track, and LCD televisions in every room. “At the end of the day, the happier the workers are and the healthier they are, it probably means the construction work (at Albian) will be completed faster and safer.”

No cost for the aerodrome was released.

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Pierre

Suncor Energy Inc. will host an investor and media teleconference today at 8:00 a.m. MT/10:00 a.m. ET to review the Board of Directors' approval of a $20.6 billion capital plan to expand production to 550,000 barrels per day in 2012 and the company's related capital spending plans for 2008

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Pierre

UPDATE - re recent oil price drop

Crisis hits North American oil investment

Oct 24 2008(Reuters) - The growing financial crisis and plunging energy prices have forced North American oil companies to scale back spending and delay projects, with expensive ventures in the Canadian oil sands hardest hit.

Below is a list of projects that have been delayed or scaled back in recent months, as well as other related news.

Oct. 23 - Suncor Energy delays construction of oil sands upgrader for C$20.6 billion Voyageur expansion by one year to 2013. Expansion boosts production from Suncor's oil sands operations near Fort McMurray, Alberta, to 550,000 bpd from 350,000.

Oct. 23 - Petro-Canada mulls deferring upgrader for proposed C$21 billion Fort Hills oil sands project to save up to C$10 billion. Move would mean partners build mine and extraction plant and sell as much as 160,000 barrels a day raw bitumen into open market starting 2011. Decision before year-end.

Oct. 23 - Nexen Inc and Opti Canada delay decision on second phase of Long Lake oil sands project to some time in 2009. Expansion would double production of synthetic crude to 120,000 barrels a day. First phase cost C$6.1 billion and is now just starting up.

Oct. 23 - Value Creation Group: construction of C$4 billion Heartland upgrader near Edmonton, Alberta, reported halted. First phase would have processed 77,500 barrels a day of bitumen into synthetic crude. Privately held company has regulatory approval for plant with 260,000 bpd capacity.

Oct 22 - Baker Hughes Inc (BHI.N: Quote, Profile, Research, Stock Buzz): expects about 200 oil and gas drilling rigs in North America would be idled during the fourth quarter because of the tighter credit markets and the declines in oil and gas prices.

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