Alberta's Oil Sand Energy Gold Mine Still Spawning Record Capital Investment Plans as New Production comes Online

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The oil sands industry of Alberta is witnessing an interesting period of growth, not only for planned capital expenditures, but now actual production increases. Oil Sands leaders, Syncrude Canada Limited (Fort McMurray, Canada) and Suncor Energy Incorporated (NYSE:SU)(Calgary, Canada) broke bitumen production records in 2002, as new projects came online. Syncrude lead the way producing an average of 230,000 barrels per day and Suncor was not far behind with a 2002 production of 205,000 barrels per day.

Syncrude and Suncor are not alone anymore as a slew of over twenty other energy companies are battling to get their projects up and going. With estimates of the oil sand bitumen reserves ranging from a reasonable 1.5 trillion barrels up to a speculative 3 trillion barrels, and with the refinement of SAGD (Steam Assisted Gravity Drainage) technology, project planning has boomed.

In an August 2001 article titled Oil Sands: Tapping Alberta's Energy Gold Mine Industrialinfo.com reported that there were about $25 Billion in potential capital spending for oil sands mines and SAGD (Steam Assisted Gravity Drainage) development, as well as upgrading and the necessary infrastructure to get the product to market. Since that time, the potential capital spending on oil sands development has more than doubled and now exceeds $50 billion. About half of that, or just over $27 billion is for 26 planned oils sands extraction projects, be they mining or SAGD extraction projects. The remaining billions are for downstream synthetic crude upgrading, refining, pipeline/terminal infrastructure for the oil sands and bitumen, and also cogeneration facilities needed to supply hot water, steam, and power to the extraction projects.

Click on the image at right to view the Alberta Oil Sands project list.

Several milestones have occurred over the past year in the oil sands industry. Albion Sands Energy Incorporated (Calgary, Canada), a consortium headed by Shell Canada Limited (Calgary, Canada) started operation early this year at its $1.25 billion Muskeg River mine project. The company hopes to produce its rated 155,000 barrels per day capacity in 2004. Plans are already being made to expand production up to 225,000 barrels/day. After that, planning has begun for the Jackpine mine, which could add potentially 300,000 barrels per day.

In early 2003, True North Energy deferred its Fort Hills oil sands project due to market conditions and the inability to attract a partner for the project. Expect this project to be resurrected in the next 1-2 years.

One of the larger planned projects, currently under development, is Canadian Natural Resources Limited's three-phased Horizon project. Horizon will include a $3.8 billion oil sands mine and bitumen separation facilities, as well as $2.2 billion for the bitumen upgrading plant. Construction is expected to begin in 2004. Start-up is planned for 2008 for the first phase, with an 110,000 barrels per day capacity, ramping up to 500,000 barrels per day with the completion of the third phase in 2012.

Suncor is nearing completion of phase one of its Firebag project. Three additional phases of Firebag will commence.

Syncrude is continuing construction of Aurora mine train 2.

For more information on the Oil Sands industry tune in this Monday at 7:30 am (CST), as Industrialinfo.com Radio hosts a discussion of Oil Sands extraction and future capital spending trends with Ed Weatherly, Manager of Oil & Gas for Industrialinfo.com. Click here to listen: Industrialinfo.com Radio.

If you miss the show, Click Here to hear this or any of the over 100 previous Industry Today shows covering topics important to industry spending, including trends, outlooks, and focus segments on specific industries.

For details on the 26 oil sands companies and projects contact the Industrialinfo.com Member Center