Oil Sands Truth: Shut Down the Tar Sands

Mining Journal: Breakdown of Companies and Projects

Growing for black gold
By: Marilyn Scales
Price tag for all oil sands projects nears $100 billion

Canada's oil sands are the world's largest single petroleum resource, nearly 1.7 trillion barrels. Most of this country's recoverable reserves (175 billion out of 180 billion bbl) are found in the Athabasca oil sands.

The adoption of unconventional recovery technologies will further increase the recoverable reserves to as much as 315 billion bbl. Such methods involve steam-assisted gravity drainage (SAGD) and better bitumen separation techniques. But for the foreseeable future, the truck-and-shovel mine will supply the lion's share of bitumen-bearing sands for treatment.

Here is a look at the seven companies currently operating or building oil sands mines. They have ambitious plans to meet the growing oil demand.


Suncor Energy produced its billionth barrel of synthetic crude from the Athabasca oil sands in 2006. The operation that began in 1967 now produces 260,000 bbl/day and is set to grow again. Suncor has plans to boost production to 350,000 bbl/day in 2008, and reach an output of 550,000 bbl/day between 2010 and 2012.

The final stage of expansion is called Voyageur, to take production capacity over half-a-million barrels a day. Suncor has applied for and received regulatory approval for the project. Site preparation has begun and detailed engineering is underway. By the end of this year, $3.0 billion will have been spent on the Voyageur project, but it will be this fall before the final capital cost is estimated.

Voyageur includes the construction of a new upgrader, and to feed it, expansion of both oil sands mining and in situ (SAGD) production. Thought is being given to developing a North Steepbank mine. The company's total reserve base is 14 billion bbl, of which 5.0 billion bbl are recoverable by mining.


The first bitumen was produced by Syncrude in 1978, making it the second commercial oil sands operation. The consortium is led by Canadian Oil Sands Trust (37%), Imperial Oil (25%) and Petro-Canada. A number of other oil companies hold less than 10% each.

The $7.8-billion stage three expansion was completed in 2006, bringing production capacity up to 350,000 bbl/day. Work included a second mining train at the Aurora 2 pit and more upgrading capacity. As stage three is debottlenecked, output is expected to rise to 400,000 bbl/day in 2012. That will be followed by a fourth stage of expansion, bringing total production up to 500,000 bbl/day by 2020, and output is expected to remain at that rate for 50 years.

Syncrude president and chief operating officer Jim Carter plans to retire at the end of April 2007. He is an oil sands industry veteran, having joined Syncrude in 1979.


The Athabasca Oil Sands project (ASOP) is a joint venture of Shell Canada (60%), Western Oil Sands (20%) and Chevron Canada (20%). Among its assets is Albian Sands Energy, which operates the Muskeg River mine and the Scotford upgrader. Production began in 2003. The partnership's daily output is now 155,000 bbl, but it has plans for projects that will eventually bring its production up to 770,000 bbl/day.

Shell reports that the AOSP leases contain 25 billion bbl of bitumen, of which 10 billion bbl are recoverable. With that resource, the partnership is embarking on an expansion that carries a $10.0-billion to $12.8-billion estimated price tag. Regulatory approval has been received to expand the Muskeg River mine, to develop the Jackpine mine and treatment plant, and to expand the froth treatment facilities at Muskeg River. These projects will be completed within the next two or three years, bringing total output to 470,000 bbl/day.

To reach its 770,000 bbl/day goal, the AOSP will expand the Jackpine mine and build the new Pierre River mine and bitumen treatment plant. Both of these proposals have yet to reach the stage where Shell is willing to propose a timeline or budget for construction.

Fort Hills

The Fort Hills project is a joint venture of Petro-Canada (55% and the operator), Teck Cominco (15%) and UTS Energy (30%). The leases lie 90 km north of Fort McMurray and contain a recoverable resource estimated to be 5.0 billion bbl.

The first phase, developing a 170,000-bbl/day mine and extraction plant at Fort Hills, has received regulatory approval. The initial budget was pegged at $5.0 billion to reach production in 2011, but the cost will probably escalate. Another $5.0 billion or more will be spent to boost capacity by 190,000 bbl/day in the future. The project has a total life of at least 30 or 40 years.

Activity during 2006 focused on optimizing the mine using a cutoff of US$20/bbl. The mining fleet will include 11 or 12 electric shovels and fifty 400-t trucks during phase one. Those numbers will grow through phases two and three to total 20 shovels and 90 to 100 trucks. At that point, the fleet will be moving 1 million t of material daily.

Building Fort Hills will take an estimated 45 months, and 2008 is the target for the beginning of engineering. Foundation construction should begin in 2009, and the erection of structural steel and equipment will be completed in 2010.

The Fort Hills leases are also home to Bitumont, just north of Fort MacKay. This is the site where crude oil was first separated successfully from the sands. The site is to be preserved due to its historic importance.

Petro-Canada hopes to build a new upgrader in Sturgeon County, 40 km northeast of Edmonton, to produce crude oil from the Fort Hills bitumen for the market.

Northern Lights

Synenco Energy, with a 60% interest, is the managing partner of the Northern Lights project. The remaining 40% belongs to SinoCanada Petroleum. When fully completed, the project will produce 100,000 bbl of light sweet synthetic crude oil for 30 years. Synenco's estimate puts recoverable barrels of bitumen at 1.3 billion bbl from a total resource of 1.67 billion bbl.

Synenco believes it has cut the capital cost estimate of its mining and treatment facilities by 20%, compared with traditional oil sands development. One way this has been achieved is by taking a modular approach to construction, and those modules are significantly larger than others built for the oil sands industry. Each of the 30 modules, constructed in Asia, will weigh 2,000 t.

There are also plans to minimize the ecological footprint of the Northern Lights project. The company says the sand on its leases is particularly coarse, making extraction easier. The coarse sand will be stored as dry tailings, removing the need to build dams for tailings ponds, and that will shorten the reclamation cycle considerably. Process water will be recycled, and no water will be discharged into the Athabasca River.

Synenco has filed the required regulatory applications and expects to receive approval this year or early next year. Engineering is underway with a target date of 2011 set for first crude production. The mining and extraction portion of the project carries a price tag of $4.4 billion. An application to build an upgrader near Edmonton has been filed, and at the last estimate will cost $3.6 billion (in 2005 dollars). The cost of the upgrader will be revised later this year.


Plans for the Kearl project include a mine 70 km north of Fort McMurray, a pipeline and a treatment component. It is a joint venture of Imperial Oil Resources Ventures (70%) and ExxonMobil Canada Properties (30%), with Imperial taking the lead as project manager.

Large scale truck-and-shovel mining will be established. The mine will be developed in phases with an initial capacity of 100,000 bbl/day, and expansion to 345,000 bbl/day is planned by 2018. The crushed oil sands will be conditioned in hydrotransport pipelines ahead of the extraction and froth treatment plants. Bitumen will be sold directly to the market, and there will be no on-site upgrading for the first phase of development. The leases contain approximately 4.6 billion bbl of recoverable bitumen.

Conventional tailings management will be practised in a temporary area until a completed pit is available for long-term storage. As the tails are moved into the pit, consolidated tailings treatment technology will be implemented. Progressive reclamation will return the lands to traditional land use capability.

The first bitumen from the $5.0-billion to $8.0-billion Kearl project should ship in 2010. The EIS has been filed, engineering is underway and construction will begin this year as soon as regulatory approvals and licences are granted. The permanent workforce of approximately 1,200 people will be flown into the mine site camp from Edmonton on a rotating schedule.


Canadian Natural Resources Ltd. (CNRL) began construction of its $6.8-billion Horizon project in December 2005. The company's leases contain an estimated 16 billion bbl of resources, but only 6.0 billion bbl are recoverable. Development will be done in three phases, with the first phase of production occurring in the third quarter of 2008 at an output target of 110,000 bbl/day. The second phase will add 45,000 bbl/day in 2010, and the third phase, to be completed in 2012, will bring total production to 232,000 bbl/day. The total investment was originally estimated to be $10.8 billion.

CNRL turned down CMJ's repeated requests to speak to someone at the company about the Horizon project, but here is what is known.

Construction at the Horizon project is slightly ahead of schedule. By the end of 2006, construction was 42% complete, procurement was 84% complete, and most major equipment was purchased and on site. Approximately 25 million bcm of overburden, or 35% of the total, had been removed. At the end of March, CNRL expected to have finished 65% of the planned work and to have spent 68% of its budget.

Growing by leaps and billions

All told, close to $100 billion may be spent on the oil sands industry in the next 15 years for both mining and in situ recovery projects. Some operators estimate that only about 40% of that amount will be spent on mining projects. The rest will go toward extraction and upgrading facilities and the endless kilometres of piping needed to bring the oil to market. The seven expansion projects described above will create at least 8,000 permanent jobs and perhaps four or five times as many construction jobs.

If all seven projects go ahead as planned, Alberta's oil sands will some day produce 2.5 million bbl of crude oil every day.

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