Category: Tar Sands

The Canadian tar sands industry has seen better days. Energy giant Statoil announced last week that it would postpone a major mining project in Alberta for at least three years. It was just the latest in a string of major setbacks for tar sands oil, which has become nearly as bad for corporate profits as it is for the environment. High labor costs and the falling price of crude oil have contributed to the industry’s dark days, but environmental activists can also take a bow. By delaying the proposed Keystone XL pipeline, which would ship tar sands oil across the Midwest to refineries on the U.S. Gulf Coast, they have helped make digging up Alberta’s boreal forest an increasingly bad investment. How did this happen? First you need to understand a bit about the economics of tar sands oil—a cheap, off-brand version of conventional crude. (You know a product […]

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CALGARY, Alberta— Canadian Natural Resources Ltd. will be allowed to resume production at an oil-sands site in northern Alberta plagued by unexplained leaks of crude that seeped to the surface, the province’s chief energy regulator said Monday. The decision partially lifts restrictions on the company’s operations that had been in place since mid-2013 after mysterious leaks of crude were detected at four separate locations at the site, which is about 217 miles (350 kilometers) northeast of the provincial capital of Edmonton. It comes a month after Canadian Natural lowered its annual production forecast, citing delays in the resumption of operations at Primrose East, the field where the heavy oil seepages occurred on the grounds of the Canadian armed forces’ Cold Lake Air Weapons Range. The Alberta Energy Regulator approved the company’s application, which was submitted July 29, to restart production using low-pressure steam injections to extract oil embedded in […]

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ConocoPhillips (COP) and Royal Dutch Shell Plc (RDSA) are among global oil companies needing crude prices as high as $150 a barrel to turn a profit from Canada’s oil sands, the costliest petroleum projects in the world, according to a study. The next most-expensive crude projects are in the deep waters off the coasts of Africa and Brazil, with each venture needing prices between $115 and $127 a barrel, said Carbon Tracker Initiative, a London-based think tank and environmental advocacy group, in a report today. As the U.S. shale drilling boom floods the world’s biggest crude market with supply, explorers are at greater risk of a price collapse that would turn some investments into money losers. “In order to sustain shareholder returns, companies should focus on low-cost projects, deferring or cancelling projects with high breakeven costs,” the report’s authors wrote. “Capital should be redeployed to share buybacks or increased […]

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Files obtained from the Canadian government show there was a push to delay publication of information about an Alberta oil spill, a newspaper said. In mid-July, Canadian Natural Resources Ltd. published a 92-page report on the 2013 seep of more than 12,000 barrels of bitumen, the viscous form of oil found in Alberta. Canadian newspaper the Toronto Star reported Tuesday it obtained more than 100 pages of emails showing the enforcement branch of Environment Canada called on a spokesman to "limit information" released about the spill last year. The Star reports the seeps began in May 2013, but weren’t disclosed until July when the newspaper issued its accounts of the incidents. Megan Leslie, a provincial lawmaker from Halifax, told the newspaper the government of Prime Minister Stephen Harper was massaging public relations about the energy sector. "The responses (to media) don’t need to be beefed up," she said. "Our […]

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The costs of producing bitumen and synthetic crude in the Albertan oil sands have increased over the past year, says the Canadian Energy Research Institute in an annual report that projects steady growth in output. Compared with last year’s report, estimated costs of production before blending and transportation are up 4.4% for steam-assisted gravity drainage , 1.6% for mining without upgrading, and 5.9% for integrated mining and upgrading ( OGJ Online, May 29, 2013 ). The new estimates of plant-gate supply costs: $50.89/bbl (Can.) for SAGD, $71.81/bbl for stand-alone mining, and $107.57/bbl for integrated mining. CERI estimates the cost of stand-alone upgrading at $40.82/bbl. When the price of West Texas Intermediate crude is $100/bbl, the only economic production technology when blending and transportation are included in the estimate is SAGD, CERI points out. After those adjustments, the WTI-equivalent supply costs at the Cushing, Okla., pricing hub are $84.99/bbl (US) […]

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The costs of producing bitumen and synthetic crude in the Albertan oil sands have increased over the past year, says the Canadian Energy Research Institute in an annual report that projects steady growth in output. Compared with last year’s report, estimated costs of production before blending and transportation are up 4.4% for steam-assisted gravity drainage , 1.6% for mining without upgrading, and 5.9% for integrated mining and upgrading ( OGJ Online, May 29, 2013 ). The new estimates of plant-gate supply costs: $50.89/bbl (Can.) for SAGD, $71.81/bbl for stand-alone mining, and $107.57/bbl for integrated mining. CERI estimates the cost of stand-alone upgrading at $40.82/bbl. When the price of West Texas Intermediate crude is $100/bbl, the only economic production technology when blending and transportation are included in the estimate is SAGD, CERI points out. After those adjustments, the WTI-equivalent supply costs at the Cushing, Okla., pricing […]

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Canadian Natural Resources Ltd. said a steam-injection practice at an oil extraction site in Alberta may have led to major oil spill there last year. More than 12,000 barrels of bitumen, the viscous form of oil found primarily in Alberta, seeped from the company’s exploration areas near the Cold Lake Air Weapons Range in Alberta last year. The company initially said legacy issues at the site may have led to the incident. In a 92-page report , released to the public Tuesday, the company said a process dubbed cyclical steam stimulation, or CSS, may have contributed to what the report described as a flow-to-surface event. CSS may have cracked open other subsurface layers, allowing oil to leak out of control from the site. "The identified causes indicate that changes to steaming strategies and enhanced monitoring, as well as remediation of defective wellbores can prevent the conditions […]

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A decision by the Canadian government to approve the planned Northern Gateway oil pipeline will be an insult to the aboriginal community, a tribal leader said. Canadian company Enbridge Energy aims to build its Northern Gateway pipeline to the coast of British Columbia. The pipeline received conditional approval from the National Energy Board, the country’s independent regulator, and a final decision is expected before the end of the month. Members of the aboriginal community and some eastern provincial leaders have expressed concern about the potential environmental threats from a pipeline designed to carry the heavier grade of crude oil in Canada. Dubbed oil sands, it’s viewed by critics as more toxic than conventional oil. Stewart Phillip, the chief of the Union of British Columbia Indian Chiefs, said a decision in favor of the pipeline from the government of Prime Minister Stephen Harper would undermine the relationship […]

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