"Co-generation"-- a term that means burning the waste gunk at the bottom of a barrel of extracted bitumen, for energy-- is a massive increase in carbon footprint, in the name of 'efficiency'. It was originally developed by Ormat-- the parent of tar sands developer Opti-- to develop oil shale in 1948 Palestine. The dirtiest plant in terms of "intensity" (the reduction of which is supposedly the goal of the Harper co2 plan) is the Opti and Nexen Long Lake plant south of Fort McMurray. If this 'technology' keeps spreading throughout the tar sands (and historical Palestine) then any language around slowing the advance of climate change becomes nothing but a sad joke.
-M
Imperial takes fresh look at $1B oilsands plan
Nabiye plan would tap 250M barrels
By Dan Healing, Calgary Herald
August 18, 2009
CALGARY - Imperial Oil Ltd. has dusted off a $1-billion, 30,000-barrel-per-day oilsands project approved by the province five years ago and is looking at resubmitting a heavily amended application.
The new Nabiye project northeast of Imperial’s Cold Lake operations in northeastern Alberta will now include a 170-megawatt cogeneration plant, sulphur recovery facilities and a drilling plan that reduces the number of well pads.
A report from Peters & Co. investment bank this week pegs the cost of the revised project at about $1.3 billion, or about $40,000 per barrel of oil equivalent per day. The report suggests the project will be economic at prices above $30 US per barrel and with a light-heavy price differential of 25 per cent or less.
Imperial will apply for approval as early as next month, it notes, from the Energy Resources Conservation Board, Alberta Environment and the Alberta Utilities Commission. It would be considered for funding in late 2010.
Imperial spokesman Gordon Wong confirmed the project is being revised but wouldn’t comment on the timelines.
Imperial’s Cold Lake operations are the oldest thermal oilsands recovery project in Alberta, with pilot production starting in the 1960s. The 13 phases of development have resulted in production of 150,000 bpd, recovered mainly by cyclic steam stimulation, where steam is injected to melt the thick crude, then stopped while bitumen is pumped out.
The Nabiye expansion project would access over 250 million barrels of resource.
“While previous expansions have been executed at lower costs, this expansion requires more infrastructure due to the current infrastructure being fully utilized,” reads the report penned by Peters analyst Kam Sandhar.
“We estimate this project will generate a rate of return of 49 per cent at strip crude oil prices and a long-term light-heavy differential of 25 per cent.”
Imperial has discussed its revised plans at community open houses with nearby residents, but plans further public consultation after submitting the application, according to its website.
In May, Imperial announced it will proceed with the 110,000-bpd, $8-billion first phase of its Kearl oilsands mining project northeast of Fort McMurray, but analysts agreed it is capable of doing both projects at the same time.
“I don’t see it as being mutually exclusive,” said analyst Randy Ollenberger of BMO Capital Markets. “They are in a very strong financial position so I think they can easily accommodate moving ahead with this project alongside Kearl Lake.
“I can’t see why they wouldn’t,” he added, estimating the cost of Nabiye will be between $1.2 billion and $1.5 billion.
The difference between heavy and light oil prices has been narrow recently, improving the economics for heavy oil, but Ollenberger said that’s not as much of a concern for Imperial as it would be for other producers. The company can refine the oil at its own refineries or at those owned by its majority owner, ExxonMobil Corp., which is buying heavy oil as feedstock.
Earlier this month, Shell Canada confirmed revisions to its Carmon Creek thermal oilsands project in northwestern Alberta, including 20 per cent less production, noting it would resubmit for approval before year-end. The company had withdrawn an earlier application for what would have been a 100,000-bpd project in November because it would not be economic.
Ollenberger said bigger players are taking advantage of lower costs as demand falls due to less activity in the oilsands.
“There’s a bit of a window here to get some of these projects off the ground,” he said, adding project engineering costs will likely be 20 to 30 per cent lower than a year ago.
Wong cautioned no final decisions have been made.
“We always take the long-term view and the conditions, the supply, the demand, the economics, all have to work before we proceed with the project,” he said.
“We are doing the planning and design work right now that will help support any changes or amendments to the original application we need to make.”
Wong said Imperial also has a 170-MW cogeneration plant at the Mahkeses heavy oil project just south of the Nabiye project. The natural gas-fuelled plants produce steam and electricity for the project, with surplus power sold into the provincial grid.
The sulphur recovery plant at Nabiye will result in fewer emissions, he said. The well pad changes are designed to reduce its footprint on the land.
dhealing@theherald.canwest.com
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