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Oil Sands News
Cenovus announced that it has received regulatory approval for the expansion of its Christina Lake project. This expansion will take place in three 40,000 bpd phases. The company also more than doubled analyst expectations last quarter, reporting a profit of $655 million (85 cents per share), which represents a more than 250 percent increase over the same period last year. By 2019, Cenovus is expecting to produce approximately 300,000 bpd of bitumen, which is roughly five times its current production.
Subject to regulatory approvals in Canada and China and court approvals in Alberta, China National Offshore Oil Corp. (CNOOC), China’s largest producer of crude oil and natural gas, announced that it will be making a significant investment in Canada’s oil sands. The company has agreed to pay approximately USD $2.1 billion for OPTI Canada. The transaction is expected to close in the fourth quarter of this year.
BlackPearl is continuing its efforts with respect to its application for phase one of commercial development at its Blackrod pilot steam‐assisted gravity drainage (SAGD) project in the Athabasca oil sands. The company expects to file an application in the first quarter of 2012 to develop a portion of the lands to support bitumen production of up to 40,000 bpd. The project has potential for ultimate production of over 70,000 bpd of bitumen. At its Mooney project, the company has commissioned phase one of the ASP (alkali, surfactant polymer) flood facility and has started injecting soft water into the reservoir, with polymer and other chemicals to be added in the coming weeks. Production is expected in approximately six to twelve months.
East Coast News
The Canada‐Nova Scotia Offshore Petroleum Board has issued a call for bids for eight exploration licences in the largely unexplored portion of Scotia Margin in the Nova Scotia offshore area. This call for bids includes four industry nominated and four non‐industry nominated deep water parcels that evidence suggests contain Early Jurassic restricted marine oil‐prone source rock. The call for bids closes on January 10, 2012.
Expro, an international oilfield services company, is constructing a new operating base in Newfoundland‐Labrador. The operating base will support the provision of well testing, subsea and DHV services for offshore Newfoundland and is expected to be in service by November 2011.
West Coast News
Husky anticipates that in the next five years it will double production of thermal heavy oil to approximately 40,000 bpd in the Lloydminster area. Most of Husky’s heavy oil production, totaling approximately 100,000 bpd, comes from the same area. Construction on Husky’s South Pikes Peak project is on track and is expected to have first oil production in the middle of next year. The company stated that its Paradise Hill project should commence operations in the third quarter of 2012.
In the first quarter of 2011, Talisman drilled eight (four net) wells in the Farrell Creek area of its Montney play. In the second quarter, Talisman concluded a $1.05 billion deal with Sasol to develop its Farrell Creek assets. Talisman and Sasol have also commissioned a feasibility study to evaluate a potential gas‐to‐liquids facility in Western Canada. The results of that study are expected in the second half of 2012.
Canadian Arctic News
Husky won its $376 million bid for oil‐drilling rights on two parcels near Norman Wells in the Northwest Territories. The Oil and Gas Management Directorate arm of the federal government’s Aboriginal Affairs and Northern Development ministry auctioned off drilling rights on 11 parcels in the Central Mackenzie Valley area for a total of $534 million in work commitments, representing the amount of money that will be spent exploring the parcels of land auctioned. Other companies that acquired licences in the auction include ConocoPhillips, Shell, Imperial Oil, ExxonMobil and MGM Energy.
ConocoPhillips acquired 87,495 hectares in the federal government auction for drilling rights in the Central Mackenzie Valley area. The acquisition has been described as the “Canol shale play.” To date this year, the company has added close to 340,000 acres to its portfolio in North American resource plays, approximately two‐thirds of which is from Canada. The company has also recently announced that it plans to split into two energy companies, one representing its Exploration & Production business and the other its Refining & Marketing business.
Shell has put its 11.4 percent share in the natural gas pipeline project in Canada’s Arctic up for sale, along with its stake in the 950 bcf Niglintgak natural gas field. The Mackenzie pipeline project received regulatory approval less than a year ago. Other owners of the project include Imperial with a 34.4 percent stake, ConocoPhillips with a 15.7 percent share, ExxonMobil with a 5.2 percent share and various Aboriginal Pipeline partners.
G Seven Generations (G7G) has proposed a rail link to carry oil from the oil sands in Alberta to the existing marine oil terminal in Valdez, Alaska. The Alberta‐Alaska rail project has received strong support from First Nations along the route and is in the midst of completing the project’s feasibility study, business plan and First Nations consultation.
Alternative Energy News
Kruger Energy has received provincial approval for the construction of its $300 million wind farm in the Montérégie region south of Montreal. Known as the Kémont, the project is rated at 101.2 MW with peak production equivalent to the annual consumption of 10,000 homes that heat with electricity. Construction of the wind farm is targeted for August 2011, and it is expected to be in service by December 2012.
Ocean Renewable Power, a Maine tidal power company, and Fundy Tidal, a Nova Scotia project developer, have entered into a partnership to install underwater turbines in the Petit Passage off the western coast of Nova Scotia. This partnership will allow Ocean Renewable to enter a lucrative tidal power market. The partnership is aiming to install 15 to 20 of Ocean Renewable’s tidal power units in the Petit Passage in 2012.
Capstone Infrastructure and SunPower have formally opened their new 20 MW solar system in Amherstburg, Ontario. The system is connected to Hydro One’s distribution system and is comprised of 57,906 panels mounted on 6,434 trackers.
On the Horizon
Cenovus announced that it intends to file a revised application in the fourth quarter of this year for its Telephone Lake project, almost tripling the original 35,000 bpd application up to 90,000 bpd. The company is also searching for a partner to take a stake in part of its Borealis oil sands property, which includes Cenovus’ whollyowned Telephone Lake project. In addition, Cenovus expects to file a 180,000 bpd regulatory application by the end of this year for a commercial SAGD facility in its Grand Rapids formation asset.
In this newsletter, all dollar amounts are Canadian dollars unless otherwise stated. We have also used the following abbreviations: bpd ‐ barrels per day; mmcfpd ‐ million cubic feet per day; bcfpd ‐ billion cubic feet per day; tcf ‐ trillion cubic feet; bbl ‐ barrel; mbbl ‐ thousand barrels; mmbbl ‐ million barrels; bbbl ‐ billion barrels; boe ‐ barrels of oil equivalent; MW – megawatts; kV – kilovolt; km – kilometre.