Old hands have grand ambitions
Oilsands know-how
Claudia Cattaneo
Financial Post
Saturday, April 21, 2007
After selling Deer Creek Energy Ltd. to French oil giant Total SA in 2005 for $1.67-billion, the startup's management team re-assembled months later to launch a new company, Laricina Energy Ltd.
Its ambitions are just as grand this time around.
Laricina wants to produce 150,000 to 200,000 b/d by 2022 to 2025 using in-situ technology from three main plays: oilsands in the McMurray Formation, the less-known Grand Rapids sands, and from carbonates, an emerging area that has caught the attention of Royal Dutch Shell PLC and Husky Energy Inc.
Glen Schmidt, former chief executive of Deer Creek who holds the same titles at the new private company, said his team is moving quickly to achieve its first oil production in 2010 or 2011 because of its experience. Its engineers and geologists have worked on 11 oilsands projects already in operation and three under construction.
"We are not confused about where we are going and we have a board of directors that has been active in the oilsands for six years. We are very much focused on what we know how to do."
The company assembled a vast land base in the past 18 months and just completed its first winter drilling program. It estimates its leases hold five billion barrels of oil in place, of which 1.2 billion barrels is recoverable.
Laricina also holds a 1% interest in the $10-billion Joclyn mining oilsands project. It had earlier sold its 84% stake to Total as part of the Deer Creek transaction.
The small interest was effectively re-purchased from Enerplus Resources Fund, which had been its 16% partner in Joclyn, before the Total transaction.
Mr. Schmidt said Laricina wanted to re-establish the Enerplus partnership in the new venture.
The interest accounts for a small portion of its assets but gives Laricina the option to participate in an upgrader, if one is built by Total, Mr. Schmidt said.
The company has not yet decided whether it wants to upgrade its bitumen.
With the discount applied to heavy oil now shrinking because of new pipelines to the United States and more demand for Canadian heavy oil among U.S. refiners, upgrading in Alberta may no longer make sense, he said.
"We view upgrading as a different business and an evolving business," Mr. Schmidt said.
The private company has raised $200-million and plans to go public in late 2008 or early 2009.
Laricina is named after a Boreal Tamarack able to thrive in adverse climates.
ccattaneo@nationalpost.com
© National Post 2007
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