Chinese firm makes major acquisition in Alberta's oilsands

Chinese firm makes major acquisition in Alberta's oilsands

www.ottawacitizen.com

CALGARY - In a blockbuster deal, privately owned Athabasca Oil Sands Corp. said PetroChina International Investment Company Limited will buy a majority stake in its operations for $1.9-billion, marking the largest venture by China in the Canadian oilsands to date.

Athabasca Oil Sands said the state-owned company will acquire a 60 per cent working interest in its MacKay River and Dover oil sands projects, which have yet to be developed.

The Calgary-based company fied approval for the two projects with provincial regulators and intends to file an application for the first 35,000-barrel per

(visit the link for the full news article)


Related News Links:
oilsandstruth.org
news.mining.com
www.canada.com

A timely acquisition by the worlds most valuable oil company. The Alberta Tar Sands have been hit hard by recent low oil prices which seem to be on the rebound at this time at over $70 a barrel.

A sign of changing times, China's interest in the project is something I've seen coming for a while. Now, all that remains is the building of a pipeline to the British Columbia coast and China can begin exporting at high volume.

Enbridge Inc. could apply late this year for federal approval of a new oil pipeline connecting Edmonton to a new marine terminal in Kitimat, B. C., Scotiabank said Thursday in its monthly commodities report.

And Scotiabank commodities specialist Patricia Mohr said developing new export markets in Asia is vital if Canada is to fully exploit the economic advantage of owning the world's second-largest oil reserves.
www.edmontonjournal.com...

The USA will continue to receive oil from the tar sands and, no doubt, be able to increase the volume if required.

The question remains how America will see this development. Is America truly set on domestic oil alone (no foreign oil)? Will it need too much time to build more refineries and drill more fields? Are there enough oil fields readily available, conceding the fact that there are new fields inside her borders that are as yet largely untapped?

Big question is what the political repercussions may be.



www.ottawacitizen.com
(visit the link for the full news article)

[edit on 31/8/09 by masqua]

I'm more concerned about the environmental impacts in these areas to wildlife etc. (as usual) China apparently doesn't seem to be as concerned about their own environment. This area represents the least amount of resistance by wars. What is Chinas processing ability with this type of oil? Or is that the reason, because it's cleaner?

Is this at all similar to Venezuelas? or is that sludge? America will likely save it's own reserves for last. I'm sure we don't want any earthquakes and sink holes over it.

As an Albertan who works in the oilsands industry I am opposed to any Chinese involvement in our industry. Until they can live up to international human rights standards I don't think we should trade witht them at all.

I wonder if they will ship in even more foreign workers even though I've been out of work since February??

Does anybody remember the debacle when a Chinese contractor collapsed a tank at CNRL Horizon? 3 people died and when the RCMP came to investigate they were denied entry to the plantsite. The incident was proven to be caused by poor work practices, in fact the system they used to construct the tank was outdated entirely.

This is one example to show why China shouldn't be involved in the oilsands, because they don't care about safe work practices, and don't even respect the authority of our gov't enought to allow it to investigate a major incident.

Originally posted by red_leader
Does anybody remember the debacle when a Chinese contractor collapsed a tank at CNRL Horizon? 3 people died and when the RCMP came to investigate they were denied entry to the plantsite. The incident was proven to be caused by poor work practices, in fact the system they used to construct the tank was outdated entirely.

As someone who works in the oil industry and has a lot of experience in investigating failures. 1st the RCMP have no juristiction in this case, they can not "investigate" a tank colapse, they can investigate criminal issues once the ERCB (for Tanks) or ABSA (for Pressure vessels) has conducted an investigation. It's just like in a air plane crash the RCMP are to secure the site until Transport Canada (TC) investigates the accident. I know of one oilfield accident that the RCMP officers who showed up before ABSA "took samples" and contaminated the site. I also know first hand of a air crash where the RCMP moved a wing on a cessna 172 because a newspaper reporter wanted it centered in the photo better, this was before TC had been on site yet.

I do agree that Chinese oilfield workers cut too many corners and do poor quality work. Also PetroChina has been snapping up oilsands rights to a huge portion of the land west of Ft. Mac.

reply to post by aleon1018


The environmental impact of the project overall is quite large, but you can count on the fact that Albertans aren't going to allow too much sillyness to go on. I've been to Alberta and spent time in that province and I can assure you they take pride in their beautiful countryside and it IS kick-butt gorgeous.

There's been a few screw-ups, particularly one concerning sludge ponds and a number of deceased ducks that decided to land on them. The reaction made the national news and, if I remember correctly, heavy fines were levied.

reply to post by red_leader

reply to post by exile1981


Thanks for your input. It's great to see first hand accounts and opinions coming from ATS members who are either on location there or experienced in oil field work.

Your comments are much appreciated.

How long would it take for those pipelines to be carrying oil?

I've worked in Albertan industry before and considering they've been hit very hard by the recession I doubt they care where they get the money from. BC has a good connection with China and it seems like China is trying to expand influence to AB now.

reply to post by masqua


I think the timeline is that it will be operating by the end of 2011, Assuming that they get approval. I'm not optomistic about that date though.

The second that a pipeline crosses a provincial boundry the decision if it gets to be built is shifted to the federal level (plus the two provinces). So depending on how quickly the NEB (National Energy Board) reviews it they could get approval to start early next year. Depending on how cranky land owners are they could delay it a while but if they run it in the existing "pipeline corridor" from Edmonton to North East BC then down from there to the terminal on the northern coast the land owner issues would be less than a more direct route. Actually that route would have easier terrain to cross.

Assuming they get fast approval and no major legal hurdles I doubt they can build it in less than 2-3 years. Even then they will be snagging a lot of pipeline crews from Alberta and BC to make it happen.

If Enbridge is building the pipeline then it likely will be fed by the upgrader they are building near Edmonton. So in answer to the earlier question by someone else. This oil will be post processing, high grade oil, not raw oil sands oil.

Lastly I wasn't probally detailed enough about the investigation of accidents involving the equipment; the Chief Inspector assigned to the company also works with the ERCB or ABSA as part of the accident and WCB is involved if an injury or fatality happened.

reply to post by exile1981


The story is all over Alberta news sources and I found some good answers already. Be sure to skim through the two links at the bottom of this post as well.

First, on the pipeline:

China's growing appetite for energy and need to secure supply likely will see more involvement in Canada through supply arrangement with major oilsands producers, and deals with transportation companies such as Enbridge, Pendill noted.

The pipeline giant appears to be dusting off its Northern Gateway project, a two-line system from the heart of Alberta's oilsands to Kitimat, B. C., that was shelved in 2006 after the market--including China --grew cold to the idea.

www.calgaryherald.com...

The initial deal moneywise:

In a blockbuster deal, privately owned Athabasca Oil Sands Corp. said PetroChina International Investment Co. Ltd. will buy a majority stake in its operations for $1.9 billion, marking the largest venture by China in the Canadian oilsands to date

What's in the deal resource-wise:

The two in-situ projects sit on approximately five billion barrels of bitumen that have yet to be developed, and are part of Athabasca's almost 10 billion barrels of bitumen reserves.

The play is one of the largest in the Athabasca region:about 121,400 hectares.

The potential cost of development:

The Calgary-based company said the projects, which it will continue to operate, will cost between$15 billion and$20 billion to develop.

So, what's in it for China and how soon they hope to beef up production:

Commercial oil could flow by 2014, with subsequent phases reaching a total 150,000 barrels per day production.

And, finally, just so we know this isn't the first step:

Previous Chinese Investments In The Oilsands - Earlier this year, China Investment Corp. invested $1.5b us in mining giant teck resources ltd., giving it a 17.2 per cent interest in the company. Teck holds a 20 per cent interest in the Fort Hills oilsands project owned by Suncor Canada (previously Petro-Canada). - Sinopec took its stake in the proposed 100,000¦ barrels-per-day northern lights project in april from 40 per cent to 50 per cent in a deal for which the value wasn't announced. It had paid Synenco Energy $105 million for the stake in 2005. Total bought in the spring of 2008 for $480 million. theChinThenationa loversea soil Co. bou ghta 16.7 per cent interest in meg energy, a private company proposing a thermal oilsands project, in 2005 for $150 million.

I'm a little amazed at all of this. China seems to be out of the gate early after the recession and setting the stage for a major partnership with Canada.

A couple of interesting links that are related:

www.edmontonjournal.com...

www.calgaryherald.com...

Block on Chinese mining bid 'linked to Pine Gap':

www.theaustralian.news.com.au...

But whilst we are whinging about the PTB lets look at US/China relation in Australia !

www.reuters.com...

The first stumbling block thrown in Enbridge's path:

An Indian band on the British Columbia coast has raised concerns about a proposed new northern pipeline and tanker port that is now under federal review.

In a letter to the Canadian Environmental Assessment Agency and Enbridge Inc., the Haisla First Nation expresses objections to the plan for a new twin pipeline system from near Edmonton to a marine terminal in Kitimat.

The proposed project, being jointly proposed by Enbridge Inc. and Enbridge Northern Gateway Project, would export petroleum from and import condensate to the oil fields in northern Alberta.

www.theglobeandmail.com...

The article does not say whether this pipeline will actually cross reservation lands, so I don't know if their concerns will carry legal weight or not. Something to research.

There already exst an agreement on a facility for liquefied natural gas (LNG)

VANCOUVER, Dec. 14, 2005 – Kitimat LNG and the Haisla First Nation today announced they have signed an Agreement in Principle for the company’s proposed LNG import and regasification terminal.


The Agreement in Principle removes a major hurdle to the project moving forward, says Rosemary Boulton, the company’s president.

www.kitimatlng.com...

Then there is this:

Enbridge

The proposed “Northern Gateway Project” is once again being considered, it is still in the very early stages and the process itself is under review. Kitamaat Village Council is presently keeping an arms length approach until the rules of engagement with both levels of government are established.

www.haisla.ca...

The Northern Gateway Project is for moving petrolium to and condensate from Kitimat:

www.northerngateway.ca...

(Click on the map to enlarge)

As to the reservation itself, Kitimat sits well within its boundaries.

.pdf map: www.bctreaty.net...

From here: www.bctreaty.net...