Unconventional Oil

[kraftdinner]

CALGARY (CP) - Privately owned energy company Value Creation Inc. announced plans Wednesday for a $4-billion oilsands project in northeastern Alberta, using new upgrading technology that promises to slash operating costs.

The company's Terre de Grace project in the Athabasca region of Alberta will be developed in two 40,000 barrel a day phases, with first production coming onstream by the 2011, subject to regulatory approval.

It is the latest of a flood of oilsands projects eager to capitalize on growing demand for North American sources of crude, and modest compared to other massive, multi-billion dollar expansions.

"We don't have to compete with them because there's a market for our product, there's more demand than supply," David Tuer, a Value Creation advisory board member said.

Sitting on 290 sections of oil sands, the Terre de Grace block has 2.45 billion barrels to 2.77 billion barrels of exploitable bitumen in place. Value Creation plans on developing at least of third of its lease in eight phases.

Value Creation said the project will combine in situ recovery - heating heavy oil underground and pumping it to the surface - and the company's proprietary bitumen upgrading technologies to reduce costs.

The Heartland upgrader, being built by BA Energy Inc., a unit of Value Creation, will have an approved capacity of about 260,000 barrels a day. The first phase of the upgrader is planned for startup in 2008 and will refine 77,500 barrels of tar-like bitumen blend.

The upgrader will use the hot water from the produced bitumen, and the separated largest particles of the bitumen, asphaltenes, to fuel operations. Once the process has passed the start-up phase, the upgraded bitumen will be able to flow through pipelines without costly diluent.

"That obviously has quite a significant impact on operating cost, that and the fact that we will be displacing natural gas over time," Tuer said. "Those two factors will have quite an impact on operating costs."

In late 2005, Value Creation and Calgary-based energy giant Enbridge Inc. (TSX:ENB), which operates the major oil pipeline between Western Canada and eastern markets, announced a strategic alliance to pursue oilsands development.

As part of that deal, Enbridge invested $25 million for a minority equity stake in the company.
Canada US

My Portfolio
Gainers Losers Actives
Mutual Fund Lookup