Newton is the chief executive officer of Strata Oil & Gas, a micro-cap company holding 53,760 acres of land in the northwestern corner of what is broadly known as Alberta’s carbonate triangle, a series of rock formations endowed with an estimated 447 billion barrels of ultra-heavy bitumen in place. So vast is this deposit of carbonate bitumen in Alberta that some have compared it, in terms of size, to the oil sands – a deeper, harder, heavier version of the renowned Athabasca Formation.
If only one third of the carbonate resource were proven recoverable, Canada could become the top-ranking country in the world in terms of oil reserves, ahead of Saudi Arabia and Venezuela. But there’s a catch. To date, no company has managed to commercially produce oil from the formation despite various attempts dating back to the ’70s. Carbonate bitumen is not included in provincial reserve estimates.
A few companies are attempting to change that. Major producers like Shell Canada Ltd. and Husky Energy Inc., in an on-again off-again fashion, have been investing in the carbonates. Husky has plans to develop its Saleski project – a development it estimates could eventually produce as much as 10 billion barrels of oil. The company hasn’t yet specified a production timeline. Shell had plans to develop its Grosmont Venture leases, but in 2008 announced it would put the project on hold. Other companies, including Athabasca Oil Corp., Laricina Energy Inc. and Osum Oil Sands Corp. have collectively raised billions of dollars to put toward projects in the carbonates.
Laricina and Osum have joint-ventured on one such project, a 10,700 bpd demonstration that holds promise of being the first to scale up from pilot to commercial development. Large capital infusions from American and Asian institutional investors have made that expansion possible. Laricina has raised $1.3 billion to date, the majority from private equity, and is backed by New York-based investment houses like Lime Rock Partners and Kayne Anderson LP. Osum, for its part, is partly owned by Blackstone Capital Partners and Warburg Pincus LLC; the Korea Investment Corporation, an investment division of the South Korean government, bought a $100-million stake in the company in 2010. The Singaporean government’s investment division is also a shareholder.
