Oil & Gas Opportunities in Canada

An Expert's View about Extraction of Crude Petroleum in Canada

Posted on: 21 Sep 2010

Canada accounts for 15 per cent of the world’s total proven oil reserves. Opportunities for UK companies in Canada are growing

Sector briefing Oil & Gas Opportunities in Canada Why Canada? Canada accounts for 15 per cent of the world?s total proven oil reserves ? 179 billion barrels ?and 86 trillion cubic feet of natural gas and for 49% of accessible global oil reserves not controlled by National Oil Companies (Source: Canadian Association of Petroleum Producers). In 2009 Canada was the world?s sixth largest producer of crude oil at 3.2 million barrels per day, and the third largest producer of natural gas at 161.4 billion cubic metres per day.(Source: BP Statistical Review June 2010) Oil & Gas directly employs nearly 500,000 people in Canada and accounted for C$35 billion of investment in 2009 (source: CAPP). Canadian crude exports to the US in Jan-Mar 2010 averaged 2.53MMbd, some 22.4% of US ?The Alberta government has oil imports (Source: American Petroleum allocated funding of over C$2.5 Institute) billion to four key CCS projects in Find general information on Canadian market the province. All of these projects conditions on UKTI?s website. Download the are to be up and running by 2015 Canada Doing Business Guide for an with construction on several due overview of Canada?s economy, business culture, potential opportunities and an to start in 2011-2012.? introduction to other relevant issue UK Trade & Investment Sector briefing: Oil & Gas opportunities in Canada production from Suncor Energy Inc. and Opportunities Canadian Natural Resources Ltd. was a key contributor to that increase. Opportunities for UK companies in Canada are growing - key areas are detailed below: The ERCB predicts the province?s annual bitumen production will jump to 3.2 million Carbon Capture & Storage barrels a day ? or 1.2 billion barrels a year ? by 2019. Over the same period, the board The Alberta government has stated that its key expects investment in the oil sands to total strategy for managing emissions from energy $148-billion. development lies in new technology, innovation and a commitment to constant improvement. Reflecting that In June 2009 Imperial Oil approved the first focus it has allocated funding of phase of its CDN $8 billion Kearl oilsands mine. over C$2.5 billion to four key CCS projects in The 110,000 barrels a day surface mining the province. All of these projects are to be up operation will begin production in late 2012. and running by 2015 with construction on The Kearl project is to be developed in three several due to start in 2011-2012. The four phases and could ultimately produce 300,000 projects are: barrels a day. AMEC, the British and -TransAlta: Pioneer Project at the under- international EPC company, have been construction Keephills three coal-fired turbine awarded the contract to develop Kearl?s near infrastructure. Wabamun in Alberta. -Shell Canada: Fully integrated carbon In November 2009 Suncor announced that it capture and storage project known as QUEST will resume the work on Firebag 3 project, at the Scotford Upgrader near Edmonton. spending $900 million in 2010; an additional -Enhance Energy Inc: The Alberta Carbon $4 billion being spent in 2010 on maintenance Trunk Line (ACTL), to incorporate gasification, of existing facilities. CO2 capture, transportation, enhanced oil recovery and storage. In January 2010 ConocoPhillips and TOTAL -Swan Hills Synfuels: To develop a C$1 announced that they would expand the billion coal gasification and carbon capture and Surmont Steam Assisted Gravity Drainage storage project in the north-central region of (SAGD) project, increasing the bitumen the province. production from 27 000 to 110 000 barrels per day. The next day Husky Energy announced SaskPower (the crown owned power that it had decided to go ahead with the $2.5 generation and distribution company for the billion Sunrise SAGD project, with construction province of Saskatchewan) is leading the starting in the second half of 2010. This is a development of one of the world?s first and joint project with BP, which (as of August largest integrated Carbon Capture and Storage 2010) firmly remains a partner in the project. (CCS) demonstration projects at Boundary Dam Power Station in Estevan, Saskatchewan. Most oil sands projects are very major The $1.4 billion government-industry investments amortised over 15-20 years, so partnership between the Government of current pricing has less impact on oilsands Canada, Government of Saskatchewan, investment decisions. Major entrants such as SaskPower and private industry will fully TOTAL, Shell, BP and increasingly Chinese oil integrate and retrofit a coal-fired generation corporations appear committed to the oil sands unit with carbon capture, resulting in low- over the long haul. The receding prospect of emission electricity and enhanced oil recovery US cap and trade legislation and the prospects of exports to the Far East via the planned injecting CO2. Enbridge Gateway pipeline to Kitimat is further boosting sentiment in the industry despite well- Oilsands Development / Environmental publicised environmental concerns. Oil sands production jumped 14 per cent in The environmental challenges in the oilsands 2009 despite unstable crude prices and provide excellent supply opportunities beyond economic turmoil. Last year, the Alberta CCS, for example in the separation of water oilsands pumped out 1.49 million barrels per and sediments in tailing ponds, the reduction day according to Alberta?s Energy Resources of steam usage in SAGD operations and in the Conservation Board (ERCB). Growing mine recycling of water. The focus upon managing UK Trade & Investment Sector briefing: Oil & Gas opportunities in Canada such resources and upon Health & Safety and environmental assessment approvals from both Environmental stewardship has clearly the federal and provincial governments. sharpened following recent events in the Gulf and the Kalamazoo River crude spill in Offshore Oil & Gas Michigan. The East Coast (Newfoundland and Nova Shale Gas and LNG Scotia) is active in exploration and development. Currently three major crude oil Shale makes up the majority of the projects ? Hibernia, Terra Nova and White Rose sedimentary section in the Western Canada ? produce more than 305,000 barrels/day. In Sedimentary Basin (WCSB) with potential June 2009 the Provincial Government targets in the Cretaceous, Jurassic, Triassic, announced the go-ahead for the long-awaited Mississippian and Devonian shales. As Hibernia South expansion with 220 million conventional gas plays continue to mature the barrels being developed by ExxonMobil, industry looks towards other potential gas Suncor Energy (having acquired Petro-Canada resources for development, resources that in 2009), Chevron, Murphy Oil, Canada were too difficult and costly to develop until the Hibernia Holding Corporation, advent of technologies like horizontal drilling StatoilHydro and, upon signing of the formal and multi-stage rock fracturing. Estimates of agreements, the province?s own Nalcor shale gas within the Western Canada Energy ? Oil and Gas. Sedimentary Basin resource vary from 86 trillion cubic feet (Tcf) to over 1000 Tcf. In November 2009 Husky announced it had found an additional estimated 60m barrels in a EnCana Corp, Nexen Inc. and Talisman deeper pool test of its White Rose field. Husky Energy Inc. ? all Calgary headquartered owns 72.5 per cent of the White Rose oilfield, companies - are gaining traction in the Horn followed by Suncor Energy at 27.5 per cent. River and Montney shale formations, both in Production from Canada's second major British Columbia. In July 2010 Apache offshore oilfield began in late 2005 and was Corporation acquired BP's western Canadian previously estimated to contain 250 million natural gas operations, paying US$3.25 billion barrels. for the Canadian properties, which include the Montney and unconventional gas plays in Meanwhile EnCana's Deep Panuke project, Alberta and northeastern British Columbia. This approximately 250 kilometers southeast of has boosted Apache's gas production by 66 per Nova Scotia has estimated recoverable sales cent from the previous 340 million cubic feet gas of 632 billion cubic feet with first gas per day. Prior to the deal, Apache was already expected in 2010. Capital construction costs for one of Canada's largest natural gas producers Deep Panuke are estimated at $760 million and has grown its Canadian presence through with average annual production phase a series of significant acquisitions over the past expenditures of approximately $150 million. decade. St John?s in Newfoundland is well-positioned Talisman, another key North American shale geographically and with its offshore experience gas player with significant drilling activity in of heavy seas and icebergs to be a key future Western Canada and Quebec saw its 2010 centre for oil and gas development in the second-quarter earnings jump tenfold Canadian Arctic and Greenland as declining reflecting production gains from shale plays in global reserves, rising prices and climate the U.S. The implication for Western Canada is change make these areas increasingly clear. attractive to E&P players. It is estimated that the Canadian Arctic may contain up to 16% of In January 2010, Apache acquired 51 percent Canada?s reserves although exploitation awaits of the planned C$4.1 billion Kitimat LNG the long-delayed Mackenzie Valley Pipeline. terminal project which will export about 700 million cubic feet of natural gas per day or 5 UK/European companies in Canada million metric tons of LNG per year from British Columbia to the Far East. Front-end Shell Canada opened their Scotford Refinery engineering and design has begun, with the near Edmonton in 1984 which became the first final investment decision expected in 2011 and refinery in the world to refine only synthetic initial gas exports forecast for 2014. The crude oil extracted from the Alberta oil sands proposed pipeline has already received UK Trade & Investment Sector briefing: Oil & Gas opportunities in Canada deposits. In 1984, the company moved its company specializing in engineering, corporate headquarters to Calgary from procurement, construction and management in Toronto. In 1999 the first gas flowed from the the energy and utilities industries. In 2009 PSN Sable Offshore Energy Project located offshore was named one of Atlantic Canada?s top 25 Nova Scotia. Shell Canada retains a 31.3% employers by MacLean?s Magazine. PSN has interest in the project. key offices in St Johns, Newfoundland servicing offshore projects and also in Calgary servicing 1999 also saw the announcement of the oilsands customers. decision to build a joint-venture oil sands project. Called the Athabasca Oil Sands Project TOTAL E&P Canada Ltd. is a wholly owned (AOSP) , the venture included the Muskeg subsidiary of French oil & gas major TOTAL SA. River Mine in the Athabasca region of northern TOTAL E&P Canada?s goal is to build a strong, Alberta and the Scotford Upgrader near sustainable position in the Athabasca oil sands Edmonton. By 2002, the mine produced its first through production of its Surmont, Joslyn and bitumen. The first phase of expansion to the Northern Lights leases, including upgrading the Scotford Upgrader currently approaches bitumen produced and pursuing exploration completion. In 2007, majority shareholder opportunities. Over the next 10 years, TOTAL Royal Dutch Shell plc, purchased the remaining Canada plans a $15 billion to $20 billion capital shares of Shell Canada it did not already own. investment in Alberta. BP has an oilsands SAGD portfolio which STATOIL?s Leismer Demonstration Project is includes a joint venture with Husky Energy to the first of Statoil?s four SAGD oilsands projects develop the Sunrise oil sands lease in the to be developed and steam injection is targeted northeastern Athabasca region of Alberta. BP to start in the latter half of 2010. One of four also have a joint venture with Devon Energy to Statoil research centres in the world, Calgary's develop the Kirby oil sands lease in the new heavy oil research centre will house the southern Alberta region of the Athabasca oil company's first technology hub for Statoil sands deposits, and a further partnership with outside Norway. Value Creation Inc. to develop the Terre de Grace oil sands lease in the northwestern Statoil has a 15% stake in Terra Nova offshore Athabasca Region of Alberta Newfoundland and a five per cent stake in the Hibernia field, operated by Hibernia BP and partners are considering building a Management and Development Company Ltd. high-pressure, natural gas pipeline from Statoil also has a 9.7% interest in the Hebron Alaska?s North Slope to North American Ben Nevis oilfield, which is being considered for markets in response to growing demand for development. ExxonMobil Canada is the natural gas. The pipeline would ship 4.5 billion operator for this field. In total, Statoil currently cubic feet per day (bcfd) of natural gas and has offshore ownership interests in Canada in could be expanded to transport up to 5.6 bcfd. seven exploration licences and two production This would be one of the largest private energy licences. projects undertaken anywhere in the world. If you have any questions on the opportunities AMEC is a market leader in the provision of above, contact the UKTI contacts named in this project management, engineering services and report. Business opportunities aimed the supply of infrastructure to the upstream specifically at UK companies are added daily to surface mining oil sands sector. AMEC helped UKTI?s website. These leads are sourced by our to build the world?s first oil sands plant in 1967 staff overseas in British Embassies, High and the world?s largest such plant in 1978. Commissions and Consulates, across all sectors AMEC participates in twelve out of fifteen and in over 100 markets. (surface mining) oil sand developments including securing prime EPC contractor status You can be alerted to business opportunities on for Imperial Oil?s new Kearl Sands C$7bn a regular basis by registering on the UKTI mining project in 2009 in addition to significant website. Find out more on UKTI?s business work on Shell?s Scotford upgrader expansion. opportunities service on the UKTI website. PSN ? Production Services Network ? headquartered in Aberdeen ? in 2008 acquired Tartan Engineering - a private, Canadian UK Trade & Investment Sector briefing: Oil & Gas opportunities in Canada Major events and activities UKTI contacts International Pipeline Exposition - Calgary Paul Paynter Contact: UKTI Calgary Director Email: paul@btoalberta.com UK Trade & Investment Time: 28-30 September 2010 Calgary Tel: (1 403) 539 6239 UKTI Carbon Capture & Storage Mission - Email: paul@btoalberta.com Alberta and Saskatchewan www.ukti.gov.uk Contact: UKTI Calgary Email: tracey@btoalberta.com Tracey Grindal Time: 14-19 November 2010 Trade Officer UK trade & Investment World Heavy Oil Congress - Edmonton Calgary Contact: UKTI Calgary Tel: (1 403) 539 2246 Email: paul@btoalberta.com Email: tracey@btoalberta.com Time: 15-17 March 2011 www.ukti.gov.uk Buyer Seller Forum - Edmonton Contact: UKTI Calgary Email: paul@btoalberta.com Time: 29-31 March 2011 Gas and Oil Exposition ? Calgary Contact : UKTI Calgary Email : paul@btoalberta.com Time: 7-9 June 2011 Find full details of all Canada oil & gas events on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Oil & Gas opportunities in Canada Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Canadian market are advised to you to meet contacts and promote your undertake as much market research and company in the Canadian market planning as possible in the UK. UKTI?s team in Canada, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in the Canadian market. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Canadian market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Oil & Gas opportunities in Canada
Posted: 21 September 2010

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