After the dramatic retreat in oil sands development in the fourth quarter of 2008, there are new positive signs for the industry that could see a spending revival in the oil sands. Recently, energy companies with interests in the oil sands have been releasing new project cost estimates that are considerably lower than the estimates from a year ago. The decline in cost estimates is a result of a fall in steel prices, increased labour productivity and renegotiations with contractors.
- Total S.A.'s wholly owned subsidiary, Total E&P Canada Ltd., sold a further 10 per cent interest in the Northern Lights Partnership ("NLP") to SinoCanada Petroleum Corporation. SinoCanada is a subsidiary of China Petroleum & Chemical Corporation. SinoCanada previously obtained a 40% interest in NLP from its purchase of Synenco Energy Inc. As a result of this latest transaction, SinoCanada and Total each have a 50% interest in the Northern Lights Oil Sands Project. Total is also forging ahead with engineering studies into an upgrader in the Edmonton area to increase bitumen processing capacity.
- Enerplus Resources Fund announced it is not continuing with development of its Kirby oil sands project. The Kirby project is 100% owned by Enerplus and will be re-evaluated at a later date to determine whether it should be re-initiated. The company reported this decision was based on current cost structures, the commodity price environment and its cost of capital.
Williams Companies, Inc., which produces off-gas from Suncor's oil sands facility, announced it is planning to build a pipeline to transport olefins and natural gas liquids from the oil sands to its Redwater Fractionator near Edmonton. Construction is expected to begin in 2010 with a goal of having the pipeline operational by 2012.
Canadian National Railway ("CN") has put forward a proposal to carry bitumen, diluted bitumen and synthetic crude across North America. CN estimates having the capacity to transport 2.6 million barrels per day to the West Coast by adding 20,000 rail cars to its fleet, which may be a more advantageous method of transport for smaller producers.
- BP and Husky are considering options to move forward with their Sunrise oil sands project. One such option would be to include carbon capture and storage technologies to mitigate environmental impacts. BP and Husky each own a 50% interest in the Sunrise oil sands project. The project was slowed in February because it was believed that costs associated with the steam-assisted, gravity-drainage technology used to extract the resource would decrease with the economic downturn.