Oilsands projects still have hurdles
Alberta’s OK just opens possibility
CALGARY The approval Thursday of three new oilsands projects in Alberta was greeted with relief by proponents and disappointment by an environmentalist, although all agreed low oil prices make building any of them unlikely in the near term.
The three projects are the first approved since the province announced late last year a 100-megatonne annual cap on greenhouse gas emissions from the oilsands.
If built to capacity at a capital cost of about $4 billion, they would produce a total of 95,000 barrels per day of heavy bitumen crude oil and 2.5 megatonnes per year of emissions, Alberta Energy said. The oilsands currently produce about 70 megatonnes of emissions per year.
In an email on Friday, Keith Stewart of Greenpeace said it doesn’t make sense to add to the “already extremely long queue of proposed tarsands projects,” given the need for rapid transition away from fossil fuels agreed upon at the Paris climate conference last year.
“The low price of oil has put all these projects on hold, but the accelerating transition to renewable energy will keep them there,” he said.
The most advanced of the three oilsands projects is the 80,000-bpd Blackrod project proposed by Calgary-based BlackPearl Resources.
CEO John Festival said he is relieved to win official endorsement from the provincial government more than four years after filing an application in May 2012.
Analysts estimate the first 20,000-barrel-per-day phase at Blackrod will cost about $800 million to build. Detailed estimates will come if the project is approved in future, Festival said.
Festival said a pilot project operating at the Blackrod site since 2011 has proven the viability of the resource and suggests it will make money when oil prices are between US$55 and $60 per barrel.
In a report, analyst Nick Lupick of AltaCorp Capital agreed that the pilot project’s success improves the chances that Blackrod will be built but cautioned that BlackPearl can’t afford to build it on its own and will need a joint venture partner.
Alberta Energy also announced Thursday approval of the 3,000-bpd Saleski oilsands pilot project proposed by heavy oil major Husky Energy and the 12,000-bpd Wildwood project by private Surmont Energy, both of Calgary. All three projects would use steam injected through wells to melt the heavy, sticky oil and allow it to be pumped to surface.
Husky spokesman Mel Duvall said Saleski, for which an application was filed in 2013, has not been sanctioned and would have to be reviewed to be included in a future budget. He didn’t have a cost estimate for its construction.
Surmont CEO Mark Smith said the company’s application process started in October 2012. He said the company had interest from backers in the past to help build the project, estimated to cost about US$375 million, but more work needs to be done to secure financial backing now that the approval is in hand.
Alberta Energy said approvals were granted after multiple environmental assessments, consultations with local indigenous and non-indigenous communities, and positive recommendations by the Alberta Energy Regulator.
It said builders must still file applications for specific construction and drilling permits and licences.